10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2014

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-12507

ARROW FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

New York	22-2448962
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
250 GLEN STREET, GLENS FALLS, NEW YORK 12801
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code:   (518) 745-1000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x  Yes     No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  x  Yes      No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  Accelerated filer   x  Non-accelerated filer Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      x  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding as of April 30, 2014
Common Stock, par value $1.00 per share	12,351,013

ARROW FINANCIAL CORPORATION

FORM 10-Q

TABLE OF CONTENTS

	Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements	3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3. Quantitative and Qualitative Disclosures About Market Risk	47
Item 4. Controls and Procedures	48
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	48
Item 1.A. Risk Factors	48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3. Defaults Upon Senior Securities	49
Item 4. Mine Safety Disclosures	49
Item 5. Other Information	49
Item 6. Exhibits	50
SIGNATURES	51

# 2

PART I - Financial Information

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Amounts) (Unaudited)
	March 31, 2014			December 31, 2013			March 31, 2013
ASSETS
Cash and Due From Banks	$	40,056		$	37,275		$	23,943
Interest-Bearing Deposits at Banks	35,994			12,705			113,231
Investment Securities:
Available-for-Sale	429,230			457,606			478,775
Held-to-Maturity (Approximate Fair Value of $322,335 at March 31, 2014; $302,305 at December 31, 2013; and $259,562 at March 31, 2013)	317,632			299,261			251,456
Federal Home Loan Bank and Federal Reserve Bank Stock	3,896			6,281			4,493
Loans	1,310,423			1,266,472			1,164,759
Allowance for Loan Losses	(14,636		)	(14,434		)	(14,603		)
Net Loans	1,295,787			1,252,038			1,150,156
Premises and Equipment, Net	28,717			29,154			29,363
Goodwill	22,003			22,003			22,003
Other Intangible Assets, Net	3,996			4,140			4,457
Other Assets	44,270			43,235			38,085
Total Assets	$	2,221,581		$	2,163,698		$	2,115,962
LIABILITIES
Noninterest-Bearing Deposits	$	277,086		$	278,958		$	254,308
NOW Accounts	908,028			817,366			845,531
Savings Deposits	524,670			498,779			476,115
Time Deposits of $100,000 or More	74,127			78,928			89,797
Other Time Deposits	164,108			168,299			185,455
Total Deposits	1,948,019			1,842,330			1,851,206
Federal Funds Purchased and   Securities Sold Under Agreements to Repurchase	13,787			11,777			12,166
Federal Home Loan Bank Overnight Advances	—			53,000			—
Federal Home Loan Bank Term Advances	20,000			20,000			30,000
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts	20,000			20,000			20,000
Other Liabilities	25,284			24,437			24,787
Total Liabilities	2,027,090			1,971,544			1,938,159
STOCKHOLDERS’ EQUITY
Preferred Stock, $5 Par Value; 1,000,000 Shares Authorized	—			—			—
Common Stock, $1 Par Value; 20,000,000 Shares Authorized (16,744,486 Shares Issued at March 31, 2014, and December 31, 2013; and 16,416,163 Shares Issued at March 31,2013)	16,744			16,744			16,416
Additional Paid-in Capital	229,842			229,290			219,178
Retained Earnings	29,692			27,457			28,423
Unallocated ESOP Shares (79,763 Shares at March 31, 2014; 87,641 Shares at December 31, 2013; and 95,172 Shares at March 31, 2013)	(1,650		)	(1,800		)	(2,000		)
Accumulated Other Comprehensive Loss	(4,075		)	(4,373		)	(8,324		)
Treasury Stock, at Cost (4,315,156 Shares at March 31, 2014; 4,296,723 Shares at December 31, 2013; and 4,310,578 Shares at March 31, 2013)	(76,062		)	(75,164		)	(75,890		)
Total Stockholders’ Equity	194,491			192,154			177,803
Total Liabilities and Stockholders’ Equity	$	2,221,581		$	2,163,698		$	2,115,962

See Notes to Unaudited Interim Consolidated Financial Statements.

# 3

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Per Share Amounts) (Unaudited)
	Three Months Ended March 31,
	2014		2013
INTEREST AND DIVIDEND INCOME
Interest and Fees on Loans	$	12,774	$	12,783
Interest on Deposits at Banks	13		27
Interest and Dividends on Investment Securities:
Fully Taxable	2,008		1,796
Exempt from Federal Taxes	1,471		1,390
Total Interest and Dividend Income	16,266		15,996
INTEREST EXPENSE
NOW Accounts	464		778
Savings Deposits	219		268
Time Deposits of $100,000 or More	230		319
Other Time Deposits	391		554
Federal Funds Purchased and   Securities Sold Under Agreements to Repurchase	4		3
Federal Home Loan Bank Advances	145		173
Junior Subordinated Obligations Issued to   Unconsolidated Subsidiary Trusts	141		144
Total Interest Expense	1,594		2,239
NET INTEREST INCOME	14,672		13,757
Provision for Loan Losses	458		100
NET INTEREST INCOME AFTER PROVISION FOR    LOAN LOSSES	14,214		13,657
NONINTEREST INCOME
Income From Fiduciary Activities	1,873		1,574
Fees for Other Services to Customers	2,194		2,282
Insurance Commissions	2,444		2,028
Net Gain on Securities Transactions	—		527
Net Gain on Sales of Loans	123		607
Other Operating Income	252		156
Total Noninterest Income	6,886		7,174
NONINTEREST EXPENSE
Salaries and Employee Benefits	7,642		7,621
Occupancy Expenses, Net	2,341		2,276
FDIC Assessments	273		264
Other Operating Expense	3,210		3,250
Total Noninterest Expense	13,466		13,411
INCOME BEFORE PROVISION FOR INCOME TAXES	7,634		7,420
Provision for Income Taxes	2,314		2,239
NET INCOME	$	5,320	$	5,181
Average Shares Outstanding:
Basic	12,354		12,272
Diluted	12,378		12,290
Per Common Share:
Basic Earnings	$	0.43	$	0.42
Diluted Earnings	0.43		0.42

Share and Per Share Amounts have been restated for the September 2013 2% stock dividend.

See Notes to Unaudited Interim Consolidated Financial Statements.

# 4

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands) (Unaudited)
	Three Months Ended March 31,
	2014			2013
Net Income	$	5,320		$	5,181
Other Comprehensive Income, Net of Tax:
Net Unrealized Securities Holding Gains      Arising During the Period	241			220
Reclassification Adjustment for Securities Gains      Included in Net Income	—			(318		)
Amortization of Net Retirement Plan Actuarial Loss	70			236
Accretion of Net Retirement Plan Prior Service Credit	(13		)	—
Other Comprehensive Income	298			138
Comprehensive Income	$	5,618		$	5,319

See Notes to Unaudited Interim Consolidated Financial Statements.

# 5

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)

	Common Stock		Additional Paid-In Capital		Retained Earnings			Unallo-cated ESOP Shares			Accumu-lated Other Com- prehensive Income (Loss)			Treasury Stock			Total
Balance at December 31, 2013	$	16,744	$	229,290	$	27,457		$	(1,800	)	$	(4,373	)	$	(75,164	)	$	192,154
Net Income	—		—		5,320			—			—			—			5,320
Other Comprehensive (Loss) Income	—		—		—			—			298			—			298
Cash Dividends Paid, $.25 per Share 1	—		—		(3,085		)	—			—			—			(3,085		)
Stock Options Exercised, Net  (19,308 Shares)	—		284		—			—			—			190			474
Shares Issued Under the Employee Stock   Purchase Plan  (4,272 Shares)	—		63		—			—			—			42			105
Stock-Based Compensation Expense	—		90		—			—			—			—			90
Tax Benefit for Disposition of Stock Options	—		5		—			—			—			—			5
Purchase of Treasury Stock   (45,608 Shares)	—		—		—			—			—			(1,165		)	(1,165		)
Acquisition of Subsidiaries  (3,595 Shares)	—		56		—			—			—			35			91
Allocation of ESOP Stock  (7,878 Shares)	—		54		—			150			—			—			204
Balance at March 31, 2014	$	16,744	$	229,842	$	29,692		$	(1,650	)	$	(4,075	)	$	(76,062	)	$	194,491
Balance at December 31, 2012	$	16,416	$	218,650	$	26,251		$	(2,150	)	$	(8,462	)	$	(74,880	)	$	175,825
Net Income	—		—		5,181			—			—			—			5,181
Other Comprehensive (Loss) Income	—		—		—			—			138			—			138
Cash Dividends Paid, $.245 per Share 1	—		—		(3,009		)	—			—			—			(3,009		)
Stock Options Exercised, Net  (23,434 Shares)	—		259		—			—			—			231			490
Shares Issued Under the Directors’ Stock   Plan  (396 Shares)	—		6		—			—			—			4			10
Shares Issued Under the Employee Stock   Purchase Plan  (4,683 Shares)	—		64		—			—			—			46			110
Stock-Based Compensation Expense	—		97		—			—			—			—			97
Tax Benefit for Disposition of Stock Options	—		8		—			—			—			—			8
Purchase of Treasury Stock  (54,231 Shares)	—		—		—			—			—			(1,328		)	(1,328		)
Acquisition of Subsidiaries  (3,757 Shares)	—		54		—			—			—			37			91
Allocation of ESOP Stock  (7,718 Shares)	—		40		—			150			—			—			190
Balance at March 31, 2013	$	16,416	$	219,178	$	28,423		$	(2,000	)	$	(8,324	)	$	(75,890	)	$	177,803

¹Cashdividends paid per share have been adjusted for the September 2013 2% stock dividend.

See Notes to Unaudited Interim Consolidated Financial Statements.

# 6

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

	Three Months Ended March 31,
Cash Flows from Operating Activities:	2014			2013
Net Income	$	5,320		$	5,181
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Loan Losses	458			100
Depreciation and Amortization	1,965			2,373
Allocation of ESOP Stock	204			190
Gains on the Sale of Securities Available-for-Sale	—			(527		)
Loans Originated and Held-for-Sale	(4,592		)	(18,842		)
Proceeds from the Sale of Loans Held-for-Sale	4,277			21,385
Net Gains on the Sale of Loans	(123		)	(607		)
Net Losses on the Sale of Premises and Equipment, Other Real Estate Owned and Repossessed Assets	3			105
Contributions to Retirement Benefit Plans	(261		)	(191		)
Deferred Income Tax (Benefit) Expense	(45		)	358
Shares Issued Under the Directors’ Stock Plan	—			10
Stock-Based Compensation Expense	90			97
Net Increase in Other Assets	(1,025		)	(991		)
Net Increase in Other Liabilities	1,274			1,006
Net Cash Provided By Operating Activities	7,545			9,647
Cash Flows from Investing Activities:
Proceeds from the Sale of Securities Available-for-Sale	—			16,261
Proceeds from the Maturities and Calls of Securities Available-for-Sale	44,907			22,846
Purchases of Securities Available-for-Sale	(16,905		)	(39,928		)
Proceeds from the Maturities and Calls of Securities Held-to-Maturity	16,561			6,815
Purchases of Securities Held-to-Maturity	(35,328		)	(18,930		)
Net (Increase) Decrease in Loans	(44,253		)	4,247
Proceeds from the Sales of Premises and Equipment, Other Real Estate Owned and Repossessed Assets	289			341
Purchase of Premises and Equipment	(89		)	(991		)
Cash Paid for Subsidiaries, Net	(75		)	(75		)
Net Decrease in Other Investments	2,385			1,299
Net Cash Used In Investing Activities	(32,508		)	(8,115		)
Cash Flows from Financing Activities:
Net Increase in Deposits	105,689			120,051
Net Decrease in Short-Term Borrowings	(50,990		)	(29,512		)
Purchase of Treasury Stock	(1,165		)	(1,328		)
Stock Options Exercised, Net	474			490
Shares Issued Under the Employee Stock Purchase Plan	105			110
Tax Benefit from Exercise of Stock Options	5			8
Cash Dividends Paid	(3,085		)	(3,009		)
Net Cash Provided By Financing Activities	51,033			86,810
Net Increase in Cash and Cash Equivalents	26,070			88,342
Cash and Cash Equivalents at Beginning of Period	49,980			48,832
Cash and Cash Equivalents at End of Period	$	76,050		$	137,174
Supplemental Disclosures to Statements of Cash Flow Information:
Interest on Deposits and Borrowings	$	1,628		$	2,299
Income Taxes	335			511
Non-cash Investing and Financing Activity:
Transfer of Loans to Other Real Estate Owned and Repossessed Assets	484			604
Acquisition of Subsidiaries	91			91

See Notes to Unaudited Interim Consolidated Financial Statements.

# 7

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1.     ACCOUNTING POLICIES

In the opinion of the management of Arrow Financial Corporation (Arrow), the accompanying unaudited consolidated interim financial statements contain all of the adjustments necessary to present fairly the financial position as of March 31, 2014, December 31, 2013 and March 31, 2013; the results of operations for the three-month periods ended March 31, 2014 and 2013; the consolidated statements of comprehensive income for the three-month periods ended March 31, 2014 and 2013; the changes in stockholders' equity for the three-month periods ended March 31, 2014 and 2013; and the cash flows for the three-month periods ended March 31, 2014 and 2013. All such adjustments are of a normal recurring nature. Certain prior period amounts have been reclassified to conform to the current presentation. The preparation of financial statements requires the use of management estimates. The unaudited consolidated interim financial statements should be read in conjunction with the audited annual consolidated financial statements of Arrow for the year ended December 31, 2013, included in Arrow's 2013 Form 10-K.

New Accounting Standards Updates (ASU): During 2014, through the date of this report, the FASB issued eight accounting standards updates, only two of which apply to Arrow.

ASU 2014-01 "Investments-Equity Method and Joint Ventures" allows an entity that invests in affordable housing projects that qualify for low-income housing tax credits to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense. The standard is effective for annual years beginning after December 15, 2014, with earlier adoption allowed. We adopted the proportional amortization method in the first quarter of 2014. The adoption did not have a material impact on our financial condition or results of operations.

ASU 2014-04 "Receivables - Trouble Debt Restructurings by Creditors" provides additional guidance on when an in substance repossession or foreclosure occurs and is effective for annual periods beginning after December 15, 2014. We are evaluating the impact of adopting this standard, and we do not expect that it will have a material impact on our financial condition or results of operations.

Note 2.    INVESTMENT SECURITIES (In Thousands)

The following table is the schedule of Available-For-Sale Securities at March 31, 2014, December 31, 2013 and March 31, 2013:

Available-For-Sale Securities
	U.S. Agency Obligations		State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Mutual Funds and Equity Securities		Total Available- For-Sale Securities
March 31, 2014
Available-For-Sale Securities,   at Amortized Cost	$	121,477	$	125,165	$	160,023	$	17,115	$	1,120	$	424,900
Available-For-Sale Securities,   at Fair Value	121,220		125,410		164,541		16,839		1,220		429,230
Gross Unrealized Gains	3		333		4,616		14		100		5,066
Gross Unrealized Losses	260		88		98		290		—		736
Available-For-Sale Securities,   Pledged as Collateral											329,039
Maturities of Debt Securities, at Amortized Cost:
Within One Year	—		49,942		9,544		—				59,486
From 1 - 5 Years	121,477		72,919		133,726		16,115				344,237
From 5 - 10 Years	—		1,624		16,753		—				18,377
Over 10 Years	—		680		—		1,000				1,680
Maturities of Debt Securities, at Fair Value:
Within One Year	—		49,991		9,714		—				59,705
From 1 - 5 Years	121,220		73,099		137,302		16,039				347,660
From 5 - 10 Years	—		1,640		17,525		—				19,165
Over 10 Years	—		680		—		800				1,480
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	50,778	$	17,937	$	10,613	$	5,868	$	—	$	85,196
12 Months or Longer	6,124		3,653		4,063		3,392		—		17,232

# 8

Available-For-Sale Securities
	U.S. Agency Obligations		State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Mutual Funds and Equity Securities		Total Available- For-Sale Securities
Total	$	56,902	$	21,590	$	14,676	$	9,260	$	—	$	102,428
Number of Securities in a   Continuous Loss Position	16		87		9		13		—		125
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	222	$	72	$	81	$	50	$	—	$	425
12 Months or Longer	38		16		17		240		—		311
Total	$	260	$	88	$	98	$	290	$	—	$	736
December 31, 2013
Available-For-Sale Securities,   at Amortized Cost	$	136,868	$	127,224	$	171,321	$	17,142	$	1,120	$	453,675
Available-For-Sale Securities,   at Fair Value	136,475		127,389		175,778		16,798		1,166		457,606
Gross Unrealized Gains	2		306		4,714		10		46		5,078
Gross Unrealized Losses	395		141		257		354		—		1,147
Available-For-Sale Securities,   Pledged as Collateral											243,769
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	60,664	$	29,967	$	15,190	$	7,375	$	—	$	113,196
12 Months or Longer	33,849		4,597		11,841		6,063		—		56,350
Total	$	94,513	$	34,564	$	27,031	$	13,438	$	—	$	169,546
Number of Securities in a   Continuous Loss Position	26		107		13		19		—		165
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	336	$	120	$	108	$	92	$	—	$	656
12 Months or Longer	59		21		149		262		—		491
Total	$	395	$	141	$	257	$	354	$	—	$	1,147
March 31, 2013
Available-For-Sale Securities,   at Amortized Cost	$	132,217	$	104,304	$	219,067	$	12,913	$	1,120	$	469,621
Available-For-Sale Securities,   at Fair Value	132,153		104,469		228,323		12,691		1,139		478,775
Gross Unrealized Gains	23		228		9,256		2		19		9,528
Gross Unrealized Losses	87		63		—		224		—		374
Available-For-Sale Securities,   Pledged as Collateral											274,433
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	94,909	$	31,325	$	3	$	8,452	$	—	$	134,689
12 Months or Longer	—		1,481		—		—		—		1,481
Total	$	94,909	$	32,806	$	3	$	8,452	$	—	$	136,170
Number of Securities in a   Continuous Loss Position	28		154		1		11		—		194

# 9

Available-For-Sale Securities
	U.S. Agency Obligations		State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Mutual Funds and Equity Securities		Total Available- For-Sale Securities
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	87	$	61	$	—	$	224	$	—	$	372
12 Months or Longer	—		2		—		—		—		2
Total	$	87	$	63	$	—	$	224	$	—	$	374

The following table is the schedule of Held-To-Maturity Securities at March 31, 2014, December 31, 2013 and March 31, 2013:

Held-To-Maturity Securities
	State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Total Held-To Maturity Securities
March 31, 2014
Held-To-Maturity Securities,   at Amortized Cost	$	190,847	$	125,785	$	1,000	$	317,632
Held-To-Maturity Securities,   at Fair Value	195,524		125,811		1,000		322,335
Gross Unrealized Gains	5,042		274		—		5,316
Gross Unrealized Losses	365		248		—		613
Held-To-Maturity Securities,   Pledged as Collateral							316,632
Maturities of Debt Securities, at Amortized Cost:
Within One Year	31,895		—		—		31,895
From 1 - 5 Years	83,077		39,598		—		122,675
From 5 - 10 Years	72,886		86,187		—		159,073
Over 10 Years	2,989		—		1,000		3,989
Maturities of Debt Securities, at Fair Value:
Within One Year	31,941		—		—		31,941
From 1 - 5 Years	85,023		39,656		—		124,679
From 5 - 10 Years	75,467		86,155		—		161,622
Over 10 Years	3,093		—		1,000		4,093
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	19,696	$	43,049	$	—	$	62,745
12 Months or Longer	5,112		—		—		5,112
Total	$	24,808	$	43,049	$	—	$	67,857
Number of Securities in a   Continuous Loss Position	86		17		—		103
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	324	$	248	$	—	$	572
12 Months or Longer	41		—		—		41
Total	$	365	$	248	$	—	$	613

# 10

Held-To-Maturity Securities
	State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Total Held-To Maturity Securities
December 31, 2013
Held-To-Maturity Securities,   at Amortized Cost	$	198,206	$	100,055	$	1,000	$	299,261
Held-To-Maturity Securities,   at Fair Value	202,390		98,915		1,000		302,305
Gross Unrealized Gains	4,762		24		—		4,786
Gross Unrealized Losses	578		1,164		—		1,742
Held-To-Maturity Securities,   Pledged as Collateral							298,261
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	23,633	$	85,339	$	—	$	108,972
12 Months or Longer	5,111		—		—		5,111
Total	$	28,744	$	85,339	$	—	$	114,083
Number of Securities in a   Continuous Loss Position	101		36		—		137
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	519	$	1,164	$	—	$	1,683
12 Months or Longer	59		—		—		59
Total	$	578	$	1,164	$	—	$	1,742
March 31, 2013
Held-To-Maturity Securities,   at Amortized Cost	$	198,858	$	51,598	$	1,000	$	251,456
Held-To-Maturity Securities,   at Fair Value	206,141		52,421		1,000		259,562
Gross Unrealized Gains	7,317		823		—		8,140
Gross Unrealized Losses	34		—		—		34
Held-To-Maturity Securities,   Pledged as Collateral							250,456
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	8,794	$	—	$	—	$	8,794
12 Months or Longer	173		—		—		173
Total	$	8,967	$	—	$	—	$	8,967
Number of Securities in a   Continuous Loss Position	33		—		—		33
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	34	$	—	$	—	$	34
12 Months or Longer	—		—		—		—
Total	$	34	$	—	$	—	$	34

In the tables above, maturities of mortgage-backed-securities - residential are included based on their expected average lives.  Actual maturities will differ from the table below because issuers may have the right to call or prepay obligations with or without prepayment penalties.

# 11

In the available-for-sale category at March 31, 2014, U.S. agency obligations consisted solely of U.S. Government Agency securities with an amortized cost of $121.5 million and a fair value of $121.2 million. Mortgage-backed securities - residential consisted of U.S. Government Agency securities with an amortized cost of $30.6 million and a fair value of $31.3 million and government sponsored entity (GSE) securities with an amortized cost of $129.4 million and a fair value of $133.2 million. In the held-to-maturity category at March 31, 2014, mortgage-backed securities-residential consisted of U.S Government Agency securities with an amortized cost of $4.8 million and a fair value of $4.8 million and GSE securities with an amortized cost of $121.0 million and a fair value of $121.0 million.

In the available-for-sale category at December 31, 2013, U.S. agency obligations consisted solely of U.S. Government Agency securities with an amortized cost of $136.9 million and a fair value of $136.5 million. Mortgage-backed securities-residential consisted of U.S. Government Agency securities with an amortized cost of $31.5 million and a fair value of $32.2 million and GSE securities with an amortized cost of $139.8 million and a fair value of $143.6 million. In the held-to-maturity category at December 31, 2013, mortgage-backed securities-residential consisted of U.S. Government Agency securities with an amortized cost of $4.9 million and a fair value of $4.7 million and GSE securities with an amortized cost of $95.2 million and a fair value of $94.2 million.

In the available-for-sale category at March 31, 2013, U.S. agency obligations consisted solely of U.S. Government Agency securities with an amortized cost of $132.2 million and a fair value of $132.2 million. Mortgage-backed securities-residential consisted of US Government Agency securities with an amortized cost of $35.3 million and a fair value of $37.2 million and GSE securities with an amortized cost of $183.8 million and a fair value of $191.1 million. In the held-to-maturity category at March 31, 2013, mortgage-backed securities-residential consisted of GSE securities with an amortized cost of $51.6 million and a fair value of $52.4 million.

Securities in a continuous loss position, in the tables above for March 31, 2014, December 31, 2013 and March 31, 2013, do not reflect any deterioration of the credit worthiness of the issuing entities.  U.S. Agency issues, including agency-backed collateralized mortgage obligations and mortgage-backed securities, are all rated at least Aaa by Moody's or AA+ by Standard and Poor's.  The state and municipal obligations are general obligations supported by the general taxing authority of the issuer, and in some cases are insured. Obligations issued by school districts are supported by state aid.  For any non-rated municipal securities, credit analysis is performed in-house based upon data that has been submitted by the issuers to the NY State Comptroller. That analysis shows no deterioration in the credit worthiness of the municipalities.  Subsequent to March 31, 2014, and through the date of filing this report, there were no securities downgraded below investment grade.  

The unrealized losses on these temporarily impaired securities are primarily the result of changes in interest rates for fixed rate securities where the interest rate received is less than the current rate available for new offerings of similar securities, changes in market spreads as a result of shifts in supply and demand, and/or changes in the level of prepayments for mortgage related securities.   Because we do not currently intend to sell any of our temporarily impaired securities, and because it is not more likely-than-not that we would be required to sell the securities prior to recovery, the impairment is considered temporary.

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Note 3.    LOANS (In Thousands)

Loan Categories and Past Due Loans

The following table presents loan balances outstanding as of March 31, 2014, December 31, 2013 and March 31, 2013 and an analysis of the recorded investment in loans that are past due at these dates.  Generally, Arrow considers a loan past due 30 or more days if the borrower is two or more payments past due.   Loans held-for-sale of $502, $64 and $864 as of March 31, 2014, December 31, 2013 and March 31, 2013, respectively, are included in the residential real estate loan balances.

Past Due Loans
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Total
March 31, 2014
Loans Past Due 30-59 Days	$	597	$	—	$	1,381	$	73	$	2,641	$	2,026	$	6,718
Loans Past Due 60-89 Days	579		—		237		16		512		438		1,782
Loans Past Due 90 or more Days	29		—		1,785		—		150		2,244		4,208
Total Loans Past Due	1,205		—		3,403		89		3,303		4,708		12,708
Current Loans	88,671		28,026		305,438		7,694		397,318		470,568		1,297,715
Total Loans	$	89,876	$	28,026	$	308,841	$	7,783	$	400,621	$	475,276	$	1,310,423
Loans 90 or More Days Past Due   and Still Accruing Interest	$	—	$	—	$	—	$	—	$	—	$	347	$	347
Nonaccrual Loans	$	182	$	—	$	2,042	$	1	$	372	$	3,687	$	6,284
December 31, 2013
Loans Past Due 30-59 Days	$	304	$	—	$	200	$	37	$	3,233	$	529	$	4,303
Loans Past Due 60-89 Days	601		—		1,200		19		1,041		1,527		4,388
Loans Past Due 90 or more Days	177		—		2,034		—		98		3,113		5,422
Total Loans Past Due	1,082		—		3,434		56		4,372		5,169		14,113
Current Loans	86,811		27,815		284,685		7,593		389,832		455,623		1,252,359
Total Loans	$	87,893	$	27,815	$	288,119	$	7,649	$	394,204	$	460,792	$	1,266,472
Loans 90 or More Days Past Due   and Still Accruing Interest	$	28	$	—	$	—	$	—	$	—	$	624	$	652
Nonaccrual Loans	$	352	$	—	$	2,048	$	—	$	219	$	3,860	$	6,479
March 31, 2013
Loans Past Due 30-59 Days	$	428	$	—	$	1,351	$	26	$	1,986	$	1,481	$	5,272
Loans Past Due 60-89 Days	421		—		200		10		375		1,058		2,064
Loans Past Due 90 or more Days	130		—		1,886		—		98		1,302		3,416
Total Loans Past Due	979		—		3,437		36		2,459		3,841		10,752
Current Loans	88,188		27,380		251,805		6,995		351,542		428,097		1,154,007
Total Loans	$	89,167	$	27,380	$	255,242	$	7,031	$	354,001	$	431,938	$	1,164,759
Loans 90 or More Days Past Due   and Still Accruing Interest	$	—	$	—	$	—	$	—	$	—	$	259	$	259
Nonaccrual Loans	$	253	$	—	$	1,953	$	4	$	334	$	2,674	$	5,218

The Company disaggregates its loan portfolio into the following six categories:

Commercial - The Company offers a variety of loan options to meet the specific needs of our commercial customers including term loans, time notes and lines of credit. Such loans are made available to businesses for working capital needs such as inventory and receivables, business expansion and equipment purchases. Generally, a collateral lien is placed on equipment or other assets owned by the borrower. These loans carry a higher risk than commercial real estate loans due to the nature of the underlying collateral, which can be business assets such as equipment and accounts receivable and generally have a lower liquidation value than real estate. In the event of default by the borrower, the Company may be required to liquidate collateral at deeply discounted values. To reduce the risk, management usually obtains personal guarantees of the borrowers.

Commercial Construction - The Company offers commercial construction and land development loans to finance projects, primarily within the communities that we serve. Many projects will ultimately be used by the borrowers’ businesses, while others are developed for resale.

# 13

These real estate loans are secured by first liens on the real estate, which may include apartments, commercial structures, housing businesses, healthcare facilities, and both owner-occupied and nonowner-occupied facilities. There is enhanced risk during the construction period, since the loan is secured by an incomplete project.

Commercial Real Estate - The Company offers commercial real estate loans to finance real estate purchases, refinancings, expansions and improvements to commercial properties. Commercial real estate loans are made to finance the purchases of real property which generally consists of real estate with completed structures. These commercial real estate loans are secured by first liens on the real estate, which may include apartments, commercial structures, housing businesses, healthcare facilities, and both owner and non owner-occupied facilities. These loans are typically less risky than commercial loans, since they are secured by real estate and buildings, and are generally originated in amounts of no more than 80% of the appraised value of the property.

Other Consumer Loans - The Company offers a variety of consumer installment loans to finance personal expenditures. Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from one to five years, based upon the nature of the collateral and the size of the loan. In addition to installment loans, the Company also offers personal lines of credit and overdraft protection. Several loans are unsecured, which carry a higher risk of loss.

Automobile - The Company primarily finances the purchases of automobiles indirectly through dealer relationships located throughout upstate New York and Vermont. Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from three to seven years. The majority of indirect consumer loans are underwritten on a secured basis using the underlying collateral being financed.

Residential Real Estate Mortgages - Residential real estate loans consist primarily of loans secured by first or second mortgages on primary residences. We originate adjustable-rate and fixed-rate one-to-four-family residential real estate loans for the construction, purchase or refinancing of an existing mortgage. These loans are collateralized primarily by owner-occupied properties generally located in the Company’s market area. Loans on one-to-four-family residential real estate are generally originated in amounts of no more than 85% of the purchase price or appraised value (whichever is lower), or have private mortgage insurance. The Company’s underwriting analysis for residential mortgage loans typically includes credit verification, independent appraisals, and a review of the borrower’s financial condition. Mortgage title insurance and hazard insurance are normally required. Construction loans have a unique risk, because they are secured by an incomplete dwelling. This risk is reduced through periodic site inspections, including one at each loan draw period. In addition, the Company offers fixed home equity loans as well as home equity lines of credit to consumers to finance home improvements, debt consolidation, education and other uses.  Our policy allows for a maximum loan to value ratio of 80%, although periodically higher advances are allowed.  The Company originates home equity lines of credit and second mortgage loans (loans secured by a second junior lien position on one-to-four-family residential real estate).  Risk is generally reduced through underwriting criteria, which include credit verification, appraisals, a review of the borrower's financial condition, and personal cash flows.  A security interest, with title insurance when necessary, is taken in the underlying real estate.

Allowance for Loan Losses

The following table presents a roll-forward of the allowance for loan losses and other information pertaining to the allowance for loan losses:

Allowance for Loan Losses
				Commercial		Commercial			Other
	Commercial			Construction		Real Estate			Consumer			Automobile			Residential			Unallocated			Total
Roll-forward of the Allowance for Loan Losses for the Year-to-Date Periods:
December 31, 2013	$	1,886		$	417	$	3,545		$	272		$	4,206		$	3,026		$	1,082		$	14,434
Charge-offs	(123		)	—		—			(14		)	(183		)	(16		)	—			(336		)
Recoveries	19			—		—			—			61			—			—			80
Provision	15			3		233			22			222			67			(104		)	458
March 31, 2014	$	1,797		$	420	$	3,778		$	280		$	4,306		$	3,077		$	978		$	14,636
December 31, 2012	$	2,344		$	601	$	3,050		$	304		$	4,536		$	3,405		$	1,058		$	15,298
Charge-offs	(773		)	—		(11		)	(8		)	(98		)	—			—			(890		)
Recoveries	4			—		—			—			91			—			—			95
Provision	44			11		340			12			(235		)	(13		)	(59		)	100
March 31, 2013	$	1,619		$	612	$	3,379		$	308		$	4,294		$	3,392		$	999		$	14,603

# 14

Allowance for Loan Losses
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Unallocated		Total
March 31, 2014
Allowance for loan losses - Loans Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance for loan losses - Loans Collectively Evaluated for Impairment	$	1,797	$	420	$	3,778	$	280	$	4,306	$	3,077	$	978	$	14,636
Ending Loan Balance - Individually Evaluated for Impairment	$	214	$	—	$	1,810	$	—	$	144	$	1,913	$	—	$	4,081
Ending Loan Balance - Collectively Evaluated for Impairment	$	89,662	$	28,026	$	307,031	$	7,783	$	400,477	$	473,363	$	—	$	1,306,342
December 31, 2013
Allowance for loan losses - Loans Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance for loan losses - Loans Collectively Evaluated for Impairment	$	1,886	$	417	$	3,545	$	272	$	4,206	$	3,026	$	1,082	$	14,434
Ending Loan Balance - Individually Evaluated for Impairment	$	221	$	—	$	1,785	$	—	$	173	$	2,309	$	—	$	4,488
Ending Loan Balance - Collectively Evaluated for Impairment	$	87,672	$	27,815	$	286,334	$	7,649	$	394,031	$	458,483	$	—	$	1,261,984
March 31, 2013
Allowance for loan losses - Loans Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance for loan losses - Loans Collectively Evaluated for Impairment	$	1,619	$	612	$	3,379	$	308	$	4,294	$	3,392	$	999	$	14,603
Ending Loan Balance - Individually Evaluated for Impairment	$	37	$	—	$	1,505	$	—	$	182	$	1,085	$	—	$	2,809
Ending Loan Balance - Collectively Evaluated for Impairment	$	89,130	$	27,380	$	253,737	$	7,031	$	353,819	$	430,853	$	—	$	1,161,950

Through the provision for loan losses, an allowance for loan losses is maintained that reflects our best estimate of the inherent risk of loss in the Company’s loan portfolio as of the balance sheet date. Additions are made to the allowance for loan losses through a periodic provision for loan losses. Actual loan losses are charged against the allowance for loan losses when loans are deemed uncollectible and recoveries of amounts previously charged off are recorded as credits to the allowance for loan losses.

Our loan officers and risk managers meet at least quarterly to discuss and review the conditions and risks associated with certain criticized and classified commercial-related relationships. In addition, our independent internal loan review department performs periodic reviews of the risk ratings on individual loans in our commercial loan portfolio.

We use a two-step process to determine the provision for loan losses and the amount of the allowance for loan losses. We measure impairment on our impaired loans on a quarterly basis. Our impaired loans are generally nonaccrual loans over $250 thousand and all troubled debt restructured loans. Our impaired loans are generally considered to be collateral dependent with the specific reserve, if any, determined based on the value of the collateral less estimated costs to sell.

The remainder of the portfolio is evaluated on a pooled basis. For each homogeneous loan pool, we estimate a total loss factor based on the historical net loss rates adjusted for applicable qualitative factors. We update the total loss factors assigned to each loan category on a quarterly basis. For the commercial, commercial construction, and commercial real estate categories, we further segregate the loan categories by credit risk profile (pools of loans graded satisfactory, special mention and substandard). Additional description of the credit risk classifications is detailed in the Credit Quality Indicators section of this note.

# 15

We determine the annualized historical net loss rate for each loan category using a trailing three-year net charge-off average. While historical net loss experience provides a reasonable starting point for our analysis, historical net losses, or even recent trends in net losses, do not by themselves form a sufficient basis to determine the appropriate level of the allowance for loan losses. Therefore, we also consider and adjust historical net loss factors for qualitative factors that impact the inherent risk of loss associated with our loan categories within our total loan portfolio. These include:

• Changes in the volume and severity of past due, nonaccrual and adversely classified loans

• Changes in the nature and volume of the portfolio and in the terms of loans

• Changes in the value of the underlying collateral for collateral dependent loans

• Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses

• Changes in the quality of the loan review system

• Changes in the experience, ability, and depth of lending management and other relevant staff

• Changes in international, national, regional, and local economic and business conditions and developments that affect the collectibility of the portfolio

• The existence and effect of any concentrations of credit, and changes in the level of such concentrations

• The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the  existing portfolio or pool

Further, due to the imprecise nature of the loan loss estimation process, the risk attributes of our loan portfolio may not be fully captured in data related to the determination of loss factors used to determine our analysis of the adequacy of the allowance for loan losses. Management, therefore, has established an unallocated portion within the allowance for loan losses reflecting the imprecision that naturally exists in the allowance for loan loss estimation process. The unallocated allowance for loan losses is not considered a significant component of the overall allowance for loan loss estimation process.

# 16

Credit Quality Indicators

The following table presents the credit quality indicators by loan category at March 31, 2014, December 31, 2013 and March 31, 2013:

Loan Credit Quality Indicators
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Total
March 31, 2014
Credit Risk Profile by Creditworthiness Category:
Satisfactory	$	82,263	$	28,026	$	287,532							$	397,821
Special Mention	960		—		614								1,574
Substandard	6,653		—		20,695								27,348
Doubtful	—		—		—								—
Credit Risk Profile Based on Payment Activity:
Performing							$	7,782	$	400,249	$	471,242	879,273
Nonperforming							1		372		4,034		4,407
December 31, 2013
Credit Risk Profile by Creditworthiness Category:
Satisfactory	79,966		27,815		267,612								375,393
Special Mention	204		—		634								838
Substandard	7,723		—		19,873								27,596
Doubtful	—		—		—								—
Credit Risk Profile Based on Payment Activity:
Performing							7,649		393,985		456,308		857,942
Nonperforming							—		219		4,484		4,703
March 31, 2013
Credit Risk Profile by Creditworthiness Category:
Satisfactory	82,063		26,180		234,609								342,852
Special Mention	183		—		1,385								1,568
Substandard	6,921		1,200		19,248								27,369
Doubtful	—		—		—								—
Credit Risk Profile Based on Payment Activity:
Performing							7,027		353,667		429,004		789,698
Nonperforming							4		334		2,934		3,272

We use an internally developed system of five credit quality indicators to rate the credit worthiness of each commercial loan defined as follows: 1) Satisfactory - "Satisfactory" borrowers have acceptable financial condition with satisfactory record of earnings and sufficient historical and projected cash flow to service the debt.  Borrowers have satisfactory repayment histories and primary and secondary sources of repayment can be clearly identified; 2) Special Mention - Loans in this category have potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date.  "Special mention" assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.  Loans which might be assigned this risk rating include loans to borrowers with deteriorating financial strength and/or earnings record and loans with potential for problems due to weakening economic or market conditions; 3) Substandard - Loans classified as “substandard” are inadequately protected by the current sound net worth or paying capacity of the borrower or the collateral pledged, if any.  Loans in this category have well defined weaknesses that jeopardize the repayment.  They are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected.  “Substandard” loans may include loans which are likely to require liquidation of collateral to effect repayment, and other loans where character or ability to repay has become suspect. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard; 4) Doubtful - Loans classified as “doubtful” have all of the weaknesses inherent in those classified as “substandard” with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions, and values highly questionable and improbable.  Although possibility of loss is extremely high, classification of these loans as “loss” has been deferred due to specific pending factors or events which may strengthen the value (i.e. possibility of additional collateral, injection of capital, collateral liquidation, debt restructure, economic recovery, etc).  Loans classified as “doubtful” need to be placed on

# 17

non-accrual; and 5) Loss - Loans classified as “loss” are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.  As of the date of the balance sheet, all loans in this category have been charged-off to the allowance for loan losses.  Commercial loans are evaluated on an annual basis, unless the credit quality indicator falls to a level of "substandard" or below, when the loan is evaluated quarterly.  The credit quality indicator is one of the factors used to determine any loss, as further described in this footnote.

For the purposes of the table above, nonperforming consumer loans are those loans on nonaccrual status or are 90 days or more past due and still accruing interest.

Impaired Loans

The following table presents information on impaired loans based on whether the impaired loan has a recorded related allowance or has no recorded related allowance:

Impaired Loans
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Total
March 31, 2014
Recorded Investment:
With No Related Allowance	$	214	$	—	$	1,810	$	—	$	144	$	1,913	$	4,081
With a Related Allowance	—		—		—		—		—		—		—
Unpaid Principal Balance:
With No Related Allowance	214		—		1,810		—		144		1,913		4,081
With a Related Allowance	—		—		—		—		—		—		—
December 31, 2013
Recorded Investment:
With No Related Allowance	$	221	$	—	$	1,785	$	—	$	173	$	2,309	$	4,488
With a Related Allowance	—		—		—		—		—		—		—
Unpaid Principal Balance:
With No Related Allowance	221		—		1,785		—		173		2,309		4,488
With a Related Allowance	—		—		—		—		—		—		—
March 31, 2013
Recorded Investment:
With No Related Allowance	$	37	$	—	$	1,505	$	—	$	182	$	1,085	$	2,809
With a Related Allowance	—		—		—		—		—		—		—
Unpaid Principal Balance:
With No Related Allowance	37		—		1,505		—		182		1,085		$	2,809
With a Related Allowance	—		—		—		—		—		—		—
For the Year-To-Date Period Ended:
March 31, 2014
Average Recorded Balance:
With No Related Allowance	$	218	$	—	$	1,798	$	—	$	159	$	2,111	$	4,286
With a Related Allowance	—		—		—		—		—		—		—
Interest Income Recognized:
With No Related Allowance	3		—		10		—		2		1		16
With a Related Allowance	—		—		—		—		—		—		—
Cash Basis Income:
With No Related Allowance	—		—		—		—		—		—		—
With a Related Allowance	—		—		—		—		—		—		—
March 31, 2013
Average Recorded Balance:
With No Related Allowance	$	41	$	—	$	2,017	$	—	$	193	$	1,088	$	3,339
With a Related Allowance	694		—		—		—		—		—		694
Interest Income Recognized:
With No Related Allowance	1		—		—		—		2		4		7
With a Related Allowance	72		—		—		—		—		—		72
Cash Basis Income:
With No Related Allowance	—		—		—		—		—		—		—
With a Related Allowance	72		—		—		—		—		—		72

# 18

At March 31, 2014, December 31, 2013 and March 31, 2013, all impaired loans were considered to be collateral dependent and were therefore evaluated for impairment based on the fair value of collateral less estimated cost to sell. There was no allowance for loan losses allocated to impaired loans at March 31, 2014. Interest income recognized in the table above, represents income earned after the loans became impaired and includes restructured loans in compliance with their modified terms and nonaccrual loans where we have recognized interest income on a cash basis.

Loans Modified in Trouble Debt Restructurings

The following table presents information on loans modified in trouble debt restructurings during the periods indicated:

Loans Modified in Trouble Debt Restructurings During the Period
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Total
For the Year-To-Date Period Ended:
March 31, 2014
Number of Loans	—		—		—		—		1		—		1
Pre-Modification Outstanding Recorded Investment	$	—	$	—	$	—	$	—	$	2	$	—	$	2
Post-Modification Outstanding Recorded Investment	$	—	$	—	$	—	$	—	$	2	$	—	$	2
March 31, 2013
Number of Loans	—		—		—		—		2		—		2
Pre-Modification Outstanding Recorded Investment	$	—	$	—	$	—	$	—	$	11	$	—	$	11
Post-Modification Outstanding Recorded Investment	$	—	$	—	$	—	$	—	$	11	$	—	$	11

In general, loans requiring modification are restructured to accommodate the projected cash-flows of the borrower. As indicated in the table above, no loans modified during the preceding twelve months subsequently defaulted as of March 31, 2014.

Note 4.    GUARANTEES (In Thousands)

The following table presents the balance for standby letters of credit for the periods ended March 31, 2014, December 31, 2013 and March 31, 2013:

Loan Commitments and Letters of Credit
	March 31, 2014		December 31, 2013		March 31, 2013
Notional Amount:
Commitments to Extend Credit	$	235,549	$	237,940	$	215,498
Standby Letters of Credit	3,333		3,345		3,562
Fair Value:
Commitments to Extend Credit	$	—	$	—	$	—
Standby Letters of Credit	56		65		53

Arrow is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit and standby letters of credit.  Commitments to extend credit include home equity lines of credit, commitments for residential and commercial construction loans and other personal and commercial lines of credit.  Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.  The contract or notional amounts of those instruments reflect the extent of the involvement Arrow has in particular classes of financial instruments.

Arrow's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments.  Arrow uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.  Arrow evaluates each customer's creditworthiness on a case-by-case basis.  Home equity lines of credit are secured by residential real estate.  Construction commitments are secured by underlying real estate.  For other lines of credit, the amount of collateral obtained, if deemed necessary by Arrow upon extension of credit, is based on management's credit evaluation of the

# 19

counterparty.  Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.  Most of the commitments are variable rate instruments.

Arrow has issued conditional commitments in the form of standby letters of credit to guarantee payment on behalf of a customer and guarantee the performance of a customer to a third party.  Standby letters of credit generally arise in connection with lending relationships. The credit risk involved in issuing these instruments is essentially the same as that involved in extending loans to customers. Contingent obligations under standby letters of credit at March 31, 2014, December 31, 2013 and March 31, 2013 represent the maximum potential future payments Arrow could be required to make.  Typically, these instruments have terms of 12 months or less and expire unused; therefore, the total amounts do not necessarily represent future cash requirements.  Each customer is evaluated individually for creditworthiness under the same underwriting standards used for commitments to extend credit and on-balance sheet instruments. Company policies governing loan collateral apply to standby letters of credit at the time of credit extension.  Loan-to-value ratios generally range from 50% for movable assets, such as inventory, to 100% for liquid assets, such as bank CD's.  Fees for standby letters of credit typically range from 1% to 3% of the notional amount.  Fees are collected upfront and are amortized over the life of the commitment. The fair values of Arrow's standby letters of credit at March 31, 2014, December 31, 2013 and March 31, 2013, in the table above, were the same as the carrying amounts.  The fair value of standby letters of credit is based on the fees currently charged for similar agreements or the cost to terminate the arrangement with the counterparties.

The fair value of commitments to extend credit is determined by estimating the fees to enter into similar agreements, taking into account the remaining terms and present creditworthiness of the counterparties, and for fixed rate loan commitments, the difference between the current and committed interest rates.  Arrow provides several types of commercial lines of credit and standby letters of credit to its commercial customers.  The pricing of these services is not isolated as Arrow considers the customer's complete deposit and borrowing relationship in pricing individual products and services.  The commitments to extend credit also include commitments under home equity lines of credit, for which Arrow charges no fee.  The carrying value and fair value of commitments to extend credit are not material and Arrow does not expect to incur any material loss as a result of these commitments.

Note 5.    COMPREHENSIVE INCOME (In Thousands)

The following table presents the components of other comprehensive income for the three months ended March 31, 2014 and 2013 :

Schedule of Comprehensive Income
	Three Months Ended March 31,
				Tax
	Before-Tax			(Expense)			Net-of-Tax
	Amount			Benefit			Amount
2014
Net Unrealized Securities Holding Gains Arising During the Period	$	399		$	(158	)	$	241
Reclassification Adjustment for Securities Gains Included in Net Income	—			—			—
Amortization of Net Retirement Plan Actuarial Loss	116			(46		)	70
Accretion of Net Retirement Plan Prior Service Credit	(22		)	9			(13		)
Other Comprehensive Income	$	493		$	(195	)	$	298
2013
Net Unrealized Securities Holding Gains Arising During the Period	$	367		$	(147	)	$	220
Reclassification Adjustment for Securities Gains Included in Net Income	(527		)	209			(318		)
Amortization of Net Retirement Plan Actuarial Loss	391			(155		)	236
Accretion of Net Retirement Plan Prior Service Credit	—			—			—
Other Comprehensive Income	$	231		$	(93	)	$	138

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The following table presents the changes in accumulated other comprehensive income by component:

Changes in Accumulated Other Comprehensive Income by Component (1)
	Unrealized			Defined Benefit Plan Items
	Gains and
	Losses on						Net Prior
	Available-for-			Net Gain			Service
	Sale Securities			(Loss)			(Cost ) Credit			Total
For the Year-To-Date periods ended:
December 31, 2013	$	2,374		$	(6,697	)	$	(50	)	$	(4,373	)
Other comprehensive income before reclassifications	241			—			—			241
Amounts reclassified from accumulated other comprehensive income	—			70			(13		)	57
Net current-period other comprehensive income	241			70			(13		)	298
March 31, 2014	$	2,615		$	(6,627	)	$	(63	)	$	(4,075	)
December 31, 2012	$	5,625		$	(14,036	)	$	(51	)	$	(8,462	)
Other comprehensive income before reclassifications	220			—			—			220
Amounts reclassified from accumulated other comprehensive income	(318		)	236			—			(82		)
Net current-period other comprehensive income	(98		)	236			—			138
March 31, 2013	$	5,527		$	(13,800	)	$	(51	)	$	(8,324	)

(1) All amounts are net of tax. Amounts in parentheses indicate debits.

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The following table presents the reclassifications out of accumulated other comprehensive income:

Reclassifications Out of Accumulated Other Comprehensive Income (1)
	Amounts Reclassified
Details about Accumulated Other	from Accumulated Other				Affected Line Item in the Statement
Comprehensive Income Components	Comprehensive Income				Where Net Income Is Presented
For the Year-to-date periods ended:
March 31, 2014
Unrealized gains and losses on available-for-sale securities
	$	—			Gain on Securities Transactions
	—				Total before tax
	—				Provision for Income Taxes
	$	—			Net of tax
Amortization of defined benefit pension items
Prior-service costs	$	22		(2)	Salaries and Employee Benefits
Actuarial gains/(losses)	(116		)	(2)	Salaries and Employee Benefits
	(94		)		Total before tax
	37				Provision for Income Taxes
	$	(57	)		Net of tax
Total reclassifications for the period	$	(57	)		Net of tax
March 31, 2013
Unrealized gains and losses on available-for-sale securities
	$	527			Gain on Securities Transactions
	527				Total before tax
	(209		)		Provision for Income Taxes
	$	318			Net of tax
Amortization of defined benefit pension items
Prior-service costs	—			(2)	Salaries and Employee Benefits
Actuarial gains/(losses)	$	(391	)	(2)	Salaries and Employee Benefits
	(391		)		Total before tax
	155				Provision for Income Taxes
	$	(236	)		Net of tax
Total reclassifications for the period	$	82			Net of tax

(1) Amounts in parentheses indicate debits to profit/loss.

(2) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see pension footnote for additional details.).

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Note 6.    STOCK BASED COMPENSATION PLANS

Under our 2013 Long-Term Incentive Plan, we granted options in the first quarter of 2014 to purchase shares of our common stock. The fair values of the options were estimated on the date of grant using the Black-Scholes option-pricing model. The fair value of our grants is expensed over the four year vesting period. Share and per share amounts have been restated for the September 2013 2% stock dividend.

The following table presents a roll-forward of our stock option plans and grants issued during 2014:

.

Schedule of Share-based Compensation Arrangements
	Stock Option Plans
Roll-Forward of Shares Outstanding:
Outstanding at January 1, 2014	389,392
Granted	74,037
Exercised	(19,308		)
Forfeited	—
Outstanding at March 31, 2014	444,121
Exercisable at Period-End	307,765
Vested and Expected to Vest	136,356
Roll-Forward of Shares Outstanding - Weighted Average Exercise Price:
Outstanding at January 1, 2014	$	22.89
Granted	25.00
Exercised	24.55
Forfeited	—
Outstanding at March 31, 2014	23.17
Exercisable at Period-End	22.38
Vested and Expected to Vest	24.95
Grants Issued During 2013 - Weighted Average Information:
Fair Value	6.04
Fair Value Assumptions:
Dividend Yield	3.97		%
Expected Volatility	35.30		%
Risk Free Interest Rate	2.19		%
Expected Lives (in years)	6.85

The following table presents information on the amounts expensed for the periods ended March 31, 2014 and 2013:

Share-Based Compensation Expense
	For the Three Months Ended March 31,
	2014		2013
Share-Based Compensation Expense	$	90	$	97

Arrow also sponsors an Employee Stock Purchase Plan under which employees purchase Arrow's common stock at a 5% discount below market price. Under current accounting guidance, a stock purchase plan with a discount of 5% or less is not considered a compensatory plan.

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Note 7.    RETIREMENT PLANS (Dollars in Thousands)

The following tables provide the components of net periodic benefit costs for the three-month periods ended March 31:

				Select
	Employees'			Executive		Postretirement
	Pension			Retirement		Benefit
	Plan			Plan		Plans
Net Periodic Benefit Cost
For the Three Months Ended March 31, 2014:
Service Cost	$	377		$	—	$	53
Interest Cost	330			61		110
Expected Return on Plan Assets	(722		)	—		—
Amortization of Prior Service (Credit) Cost	(11		)	18		(29		)
Amortization of Net Loss	86			23		7
Net Periodic Benefit Cost	$	60		$	102	$	141
Plan Contributions During the Period	$	—		$	119	$	142
Estimated Future Contributions in the Current Fiscal Year	—			357		426
For the Three Months Ended March 31, 2013:
Service Cost	$	367		$	22	$	51
Interest Cost	353			38		81
Expected Return on Plan Assets	(716		)	—		—
Amortization of Prior Service (Credit) Cost	9			20		(29		)
Amortization of Net Loss	312			38		41
Net Periodic Benefit Cost	$	325		$	118	$	144
Plan Contributions During the Period	$	—		$	111	$	81

We are not required to make a contribution to our qualified pension plan in 2014, and currently, we do not expect to make a contribution in 2014. Arrow makes contributions to its other post-retirement benefit plans in an amount equal to benefit payments for the year.

Note 8.    EARNINGS PER COMMON SHARE (In Thousands, Except Per Share Amounts)

The following table presents a reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings per common share (“EPS”) for periods ended March 31, 2014 and 2013.  All share and per share amounts have been adjusted for the September 2013 2% stock dividend.

Earnings Per Share
	Year-to-Date Period Ended:
	March 31, 2014		March 31, 2013
Earnings Per Share - Basic:
Net Income	$	5,320	$	5,181
Weighted Average Shares - Basic	12,354		12,272
Earnings Per Share - Basic	$	0.43	$	0.42
Earnings Per Share - Diluted:
Net Income	$	5,320	$	5,181
Weighted Average Shares - Basic	12,354		12,272
Dilutive Average Shares Attributable to Stock Options	24		18
Weighted Average Shares - Diluted	12,378		12,290
Earnings Per Share - Diluted	$	0.43	$	0.42
Antidilutive Shares Excluded from the Calculation of Earnings Per Share	—		129

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Note 9.    FAIR VALUE OF FINANCIAL INSTRUMENTS (In Thousands)

FASB ASC Subtopic 820-10 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP) and requires certain disclosures about fair value measurements. We do not have any nonfinancial assets or liabilities measured at fair value on a recurring basis. The only assets or liabilities that Arrow measured at fair value on a recurring basis at March 31, 2014, December 31, 2013 and March 31, 2013 were securities available-for-sale. Arrow held no securities or liabilities for trading on such date.

The table below presents the financial instrument's fair value and the amounts within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement:

Fair Value of Assets and Liabilities Measured on a Recurring and Nonrecurring Basis
			Fair Value Measurements at Reporting Date Using:
	Fair Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Fair Value of Assets and Liabilities Measured on a Recurring Basis:
March 31, 2014
Securities Available-for Sale:
U.S. Agency Obligations	$	121,220	$	—	$	121,220	$	—
State and Municipal Obligations	125,410		—		125,410		—
Mortgage-Backed Securities - Residential	164,541		—		164,541		—
Corporate and Other Debt Securities	16,839		—		16,839		—
Mutual Funds and Equity Securities	1,220		—		1,220		—
Total Securities Available-for-Sale	$	429,230	$	—	$	429,230	$	—
December 31, 2013
Securities Available-for Sale:
U.S. Agency Obligations	$	136,475	$	—	$	136,475	$	—
State and Municipal Obligations	127,389		—		127,389		—
Mortgage-Backed Securities - Residential	175,778		—		175,778		—
Corporate and Other Debt Securities	16,798		—		16,798		—
Mutual Funds and Equity Securities	1,166		—		1,166		—
Total Securities Available-for Sale	$	457,606	$	—	$	457,606	$	—
March 31, 2013
Securities Available-for Sale:
U.S. Agency Obligations	$	132,153	$	—	$	132,153	$	—
State and Municipal Obligations	104,469		—		104,469		—
Mortgage-Backed Securities - Residential	228,323		—		228,323		—
Corporate and Other Debt Securities	12,691		—		12,691		—
Mutual Funds and Equity Securities	1,139		—		1,139		—
Total Securities Available-for Sale	$	478,775	$	—	$	478,775	$	—
Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis:
March 31, 2014
Other Real Estate Owned and Repossessed Assets, Net	$	198	$	—	$	—	$	198	$	(52	)
December 31, 2013
Other Real Estate Owned and Repossessed Assets, Net	$	144	$	—	$	—	$	144	$	(79	)
March 31, 2013
Other Real Estate Owned and Repossessed Assets, Net	$	1,194	$	—	$	—	$	1,194	$	(56	)

# 25

We determine the fair value of financial instruments under the following hierarchy:

• Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

• Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

• Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Fair Value Methodology for Assets and Liabilities Measured on a Recurring Basis

The fair value of Level 1 securities available-for-sale are based on unadjusted, quoted market prices from exchanges in active markets. The fair value of Level 2 securities available-for-sale are based on an independent bond and equity pricing service for identical assets or significantly similar securities and an independent equity pricing service for equity securities not actively traded.  The pricing service uses a variety of techniques to arrive at fair value including market maker bids, quotes and pricing models.  Inputs to the pricing models include recent trades, benchmark interest rates, spreads and actual and projected cash flows.  

Fair Value Methodology for Assets and Liabilities Measured on a Nonrecurring Basis

The fair value of collateral dependent impaired loans was based on third-party appraisals of the collateral. The fair value of other real estate owned was based on third-party appraisals. Other assets which might have been included in this table include mortgage servicing rights, goodwill and other intangible assets. Arrow evaluates each of these assets for impairment on a quarterly basis, with no impairment recognized for these assets at March 31, 2014, December 31, 2013 and March 31, 2013.

# 26

Fair Value by Balance Sheet Grouping

The following table presents a summary of the carrying amount, the fair value or an amount approximating fair value and the fair value hierarchy of Arrow’s financial instruments:

Schedule of Fair Values by Balance Sheet Grouping
					Fair Value Hierarchy
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
March 31, 2014
Cash and Cash Equivalents	$	76,050	$	76,050	$	76,050	$	—	$	—
Securities Available-for-Sale	429,230		429,230		—		429,230		—
Securities Held-to-Maturity	317,632		322,335		—		322,335		—
Federal Home Loan Bank and Federal   Reserve Bank Stock	3,896		3,896		3,896		—		—
Net Loans	1,295,787		1,306,043		—		—		1,306,043
Accrued Interest Receivable	6,808		6,808		6,808		—		—
Deposits	1,948,019		1,944,116		1,709,784		234,332		—
Federal Funds Purchased and Securities   Sold Under Agreements to Repurchase	13,787		13,787		13,787		—		—
Federal Home Loan Bank Term Advances	20,000		20,519		—		20,519		—
Junior Subordinated Obligations Issued   to Unconsolidated Subsidiary Trusts	20,000		20,000		—		20,000		—
Accrued Interest Payable	405		405		405		—		—
December 31, 2013
Cash and Cash Equivalents	$	49,980	$	49,980	$	49,980	$	—	$	—
Securities Available-for-Sale	457,606		457,606		—		457,606		—
Securities Held-to-Maturity	299,261		302,305		—		302,305		—
Federal Home Loan Bank and Federal   Reserve Bank Stock	6,281		6,281		6,281		—		—
Net Loans	1,252,038		1,266,020		—		—		1,266,020
Accrued Interest Receivable	5,745		5,745		5,745		—		—
Deposits	1,842,330		1,839,613		1,595,103		244,510		—
Federal Funds Purchased and Securities   Sold Under Agreements to Repurchase	11,777		11,777		11,777		—		—
Federal Home Loan Bank Term Advances	73,000		74,629		53,000		21,629		—
Junior Subordinated Obligations Issued   to Unconsolidated Subsidiary Trusts	20,000		20,000		—		20,000		—
Accrued Interest Payable	439		439		439		—		—
March 31, 2013
Cash and Cash Equivalents	$	137,174	$	137,174	$	137,174	$	—	$	—
Securities Available-for-Sale	478,775		478,775		—		478,775		—
Securities Held-to-Maturity	251,456		259,562		—		259,562		—
Federal Home Loan Bank and Federal   Reserve Bank Stock	4,493		4,493		4,493		—		—
Net Loans	1,150,156		1,167,063		—		—		1,167,063
Accrued Interest Receivable	6,481		6,481		6,481		—		—
Deposits	1,851,206		1,850,614		1,575,954		274,660		—
Federal Funds Purchased and Securities   Sold Under Agreements to Repurchase	12,166		12,166		12,166		—		—
Federal Home Loan Bank Term Advances	30,000		31,263		—		31,263		—
Junior Subordinated Obligations Issued   to Unconsolidated Subsidiary Trusts	20,000		20,000		—		20,000		—
Accrued Interest Payable	523		523		523		—		—

# 27

Fair Value Methodology for Financial Instruments Not Measured on a Recurring or Nonrecurring Basis

Securities held-to-maturity are fair valued utilizing an independent bond pricing service for identical assets or significantly similar securities.  The pricing service uses a variety of techniques to arrive at fair value including market maker bids, quotes and pricing models. Inputs to the pricing models include recent trades, benchmark interest rates, spreads and actual and projected cash flows.

Fair values for loans are estimated for portfolios of loans with similar financial characteristics.  Loans are segregated by type such as commercial, commercial real estate, residential mortgage, indirect and other consumer loans.  Each loan category is further segmented into fixed and adjustable interest rate terms and by performing and nonperforming categories.  The fair value of performing loans is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan.  The estimate of maturity is based on historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of current economic and lending conditions.   Fair value for nonperforming loans is generally based on recent external appraisals.  If appraisals are not available, estimated cash flows are discounted using a rate commensurate with the risk associated with the estimated cash flows.  Assumptions regarding credit risk, cash flows and discount rates are judgmentally determined using available market information and specific borrower information.

The fair value of time deposits is based on the discounted value of contractual cash flows, except that the fair value is limited to the extent that the customer could redeem the certificate after imposition of a premature withdrawal penalty.  The discount rates are estimated using the FHLBNY yield curve, which is considered representative of Arrow’s time deposit rates. The fair value of all other deposits is equal to the carrying value.

The fair value of FHLBNY advances is estimated based on the discounted value of contractual cash flows.  The discount rate is estimated using current rates on FHLBNY advances with similar maturities and call features.

Based on Arrow’s capital adequacy, the book value of the outstanding trust preferred securities (Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts) are considered to approximate fair value since the interest rates are variable (indexed to LIBOR) and Arrow is well-capitalized.

# 28

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Arrow Financial Corporation:

We have reviewed the consolidated balance sheets of Arrow Financial Corporation and subsidiaries (the Company) as of March 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, changes in stockholders' equity and cash flows for the three-month periods ended March 31, 2014 and 2013. These consolidated financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Arrow Financial Corporation and subsidiaries as of December 31, 2013, and the related consolidated statements of income, comprehensive income, changes in stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated March 14, 2014, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2013, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ KPMG LLP

Albany, New York

May 8, 2014

# 29

ARROW FINANCIAL CORPORATION AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

March 31, 2014

Note on Terminology - In this Quarterly Report on Form 10-Q, the terms “Arrow,” “the registrant,” “the company,” “we,” “us,” and “our” generally refer to Arrow Financial Corporation and its subsidiaries as a group, except where the context indicates otherwise.

The Company and Its Subsidiaries - Arrow is a two-bank holding company headquartered in Glens Falls, New York. Our banking subsidiaries are Glens Falls National Bank and Trust Company (Glens Falls National) whose main office is located in Glens Falls, New York, and Saratoga National Bank and Trust Company (Saratoga National) whose main office is located in Saratoga Springs, New York. Our non-bank subsidiaries include Capital Financial Group, Inc. (an insurance agency specializing in selling and servicing group health care policies); three property and casualty insurance agencies: Loomis & LaPann, Inc., Upstate Agency LLC, and McPhillips Agency which is a division of Glens Falls National Insurance Agencies LLC; North Country Investment Advisers, Inc. (a registered investment adviser that provides investment advice to our proprietary mutual funds); Glens Falls National Community Development Corporation (which invests in qualifying community development projects); and Arrow Properties, Inc. (a real estate investment trust, or REIT). All of these are wholly- owned or majority owned subsidiaries of Glens Falls National.    

Our Peer Group - At certain points in this Report, our performance is compared with that of our “peer group” of financial institutions. Unless otherwise specifically stated, this peer group is comprised of the group of 344 domestic bank holding companies with $1 to $3 billion in total consolidated assets as identified in the Federal Reserve Board’s “Bank Holding Company Performance Report” for December 31, 2013 (the most recent such Report currently available), and peer group data has been derived from such Report.

Forward Looking Statements - This Quarterly Report on Form 10-Q contains statements that are not historical in nature but rather are based on our beliefs, assumptions, expectations, estimates and projections about the future. These statements are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and involve a degree of uncertainty and attendant risk. Words such as “expects,” “believes,” “anticipates,” “estimates” and variations of such words and similar expressions are intended to identify such forward-looking statements. Some of these statements, such as those included in the interest rate sensitivity analysis in Part I, Item 3, entitled “Quantitative and Qualitative Disclosures About Market Risk,” are merely presentations of what future performance or changes in future performance would look like based on hypothetical assumptions and on simulation models. Other forward-looking statements are based on our general perceptions of market conditions and trends in business activity, both our own and in the banking industry generally, as well as current management strategies for future operations and development.

Examples of Forward-Looking Statements:
Topic	Page	Location
Impact of market rate structure on net interest margin, loan yields and deposit rates	38	1st and Last paragraph under "Quarterly Taxable Equivalent Yield on Loans"
	48	Last paragraph under "Quantitative and Qualitative Disclosures about Market Risk
Provision for loan losses	41	1st paragraph in section
Future level of nonperforming assets	42	Last 3 paragraphs under "Risk Elements"
Future level of residential real estate loans	38	2nd paragraph under "Residential Real Estate Loans"
Future level of indirect consumer loans	38	Last paragraph under "Automobile Loans"
Future level of commercial loans	38	3rd paragraph under "Commercial, Commercial Real Estate and Construction and Land Development Loans"
Impact of changing capital standards and legislative developments	34	1st paragraph under "Regulatory Capital and Increase in Stockholders' Equity"
	42	"Important Future Changes to Regulatory Capital Standards"
Liquidity	45	1st full paragraph
Fees for other services to customers	46	3rd paragraph under "Noninterest Income"
Impact of changes in mortgage rates	39	Paragraph under "Investment Sales, Purchases and Maturities"
VISA	34	"VISA Class B Common Stock"

These forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to quantify or, in some cases, to identify.  In the case of all forward-looking statements, actual outcomes and results may differ materially from what the statements predict or forecast.  Factors that could cause or contribute to such differences include, but are not limited to:  

a. rapid and dramatic changes in economic and market conditions, such as the U.S. economy experienced in the early stages of the 2008-2009 "financial crisis;"

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b.sharp fluctuations in interest rates, economic activity, and consumer spending patterns;

c.sudden changes in the market for products we provide, such as real estate loans;

d. significant new banking laws and regulations, including an assortment of new banking regulations still to be issued under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2011 (the Dodd-Frank Act or Dodd-Frank);

e. unexpected or enhanced competition from new or unforeseen sources;

f. network attaches or unauthorized access to computer systems and network infrastructure, interruptions of service and other security risks; and

g. similar uncertainties inherent in banking operations, the financial world, or governmental finance generally, such as periodic heightened concerns about U.S. or state governmental budgets, deficits, spending and taxes.

Readers are cautioned not to place undue reliance on forward-looking statements in this Report, which speak only as of the date hereof. We undertake no obligation to revise or update these forward-looking statements to reflect the occurrence of unanticipated events. This Quarterly Report should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2013.

USE OF NON-GAAP FINANCIAL MEASURES

The Securities and Exchange Commission (SEC) has adopted Regulation G, which applies to all public disclosures, including earnings releases, made by registered companies that contain “non-GAAP financial measures.”  GAAP is generally accepted accounting principles in the United States of America.  Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure and a statement of the Company’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures.  The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP.  When these exempted measures are included in public disclosures, supplemental information is not required.  The following measures used in this Report, which are commonly utilized by financial institutions, have not been specifically exempted by the SEC and may constitute "non-GAAP financial measures" within the meaning of the SEC's new rules, although we are unable to state with certainty that the SEC would so regard them.

Tax-Equivalent Net Interest Income and Net Interest Margin: Net interest income, as a component of the tabular presentation by financial institutions of Selected Financial Information regarding their recently completed operations, is commonly presented on a tax-equivalent basis.  That is, to the extent that some component of the institution's net interest income, which is presented on a before-tax basis, is exempt from taxation (e.g., is received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added to the actual before-tax net interest income total.  This adjustment is considered helpful in comparing one financial institution's net interest income to that of other institutions or in analyzing any institution’s net interest income trend line over time, to correct any analytical distortion that might otherwise arise from the fact that financial institutions vary widely in the proportions of their portfolios that are invested in tax-exempt securities, and that even a single institution may significantly alter over time the proportion of its own portfolio that is invested in tax-exempt obligations.  Moreover, net interest income is itself a component of a second financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average earning assets.  For purposes of this measure as well, tax-equivalent net interest income is generally used by financial institutions, as opposed to actual net interest income, again to provide a better basis of comparison from institution to institution and to better demonstrate a single institution’s performance over time.  We follow these practices.

The Efficiency Ratio: Financial institutions often use an "efficiency ratio" as a measure of expense control.  The efficiency ratio typically is defined as the ratio of noninterest expense to net interest income and noninterest income.  Net interest income as utilized in calculating the efficiency ratio is, once again, typically expressed on a tax-equivalent basis (see preceding paragraph).  Moreover, most financial institutions, in calculating the efficiency ratio, also adjust both noninterest expense and noninterest income to exclude from these items (as calculated under GAAP) certain recurring component elements of income and expense, such as intangible asset amortization (deducted from noninterest expense) and securities gains or losses (excluded from noninterest income).  We follow these practices.

Tangible Book Value per Share:  Tangible equity is total stockholders’ equity less intangible assets.  Tangible book value per share is tangible equity divided by total shares issued and outstanding.  Tangible book value per share is often regarded as a more meaningful comparative ratio than book value per share as calculated under GAAP, that is, total stockholders’ equity including intangible assets divided by total shares issued and outstanding.  Intangible assets includes many items, but essentially represents goodwill for Arrow.

Adjustments for Certain Items of Income or Expense:  IIn addition to our disclosures of net income, earnings per share (i.e. EPS), return on average assets (i.e. ROA), return on average equity (i.e. ROE) and other financial measures in accordance with GAAP, we may also provide comparative disclosures that adjust these GAAP financial measures by removing the impact of certain transactions or other material items of income or expense.  We believe that the resulting non-GAAP financial measures may improve an understanding of our results of operations by separating out items that have a disproportional positive or negative impact on the particular period in question. Additionally, we believe that the adjustment for certain items allows a better comparison from period-to-period in our results of operations with respect to our fundamental lines of business including the commercial banking business.

We believe that the non-GAAP financial measures disclosed by us from time-to-time are useful in evaluating our performance and that such information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP.  Our non-GAAP financial measures may differ from similar measures presented by other companies.

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Selected Quarterly Information - Unaudited(dollars in thousands)
Quarter Ended	03/31/2014			12/31/2013			09/30/2013			06/30/2013			03/31/2013
Net Income	$	5,320		$	5,784		$	5,623		$	5,207		$	5,181
Transactions Recorded in Net Income (Net of Tax):
Net Gain on Securities Transactions	—			—			—			8			318
Net Gain on Sales of Loans	74			114			100			301			367
Share and Per Share Data:1
Period End Shares Outstanding	12,350			12,360			12,329			12,284			12,251
Basic Average Shares Outstanding	12,354			12,339			12,308			12,261			12,272
Diluted Average Shares Outstanding	12,378			12,387			12,344			12,279			12,290
Basic Earnings Per Share	$	0.43		$	0.47		$	0.46		$	0.42		$	0.42
Diluted Earnings Per Share	0.43			0.47			0.46			0.42			0.42
Cash Dividend Per Share	0.25			0.25			0.25			0.25			0.25
Selected Quarterly Average Balances:
Interest-Bearing Deposits at Banks	$	17,184		$	46,853		$	14,096		$	26,632		$	41,145
Investment Securities	755,008			762,768			744,928			771,018			711,848
Loans	1,284,649			1,254,957			1,224,840			1,185,041			1,169,870
Deposits	1,887,589			1,904,922			1,800,181			1,801,346			1,773,126
Other Borrowed Funds	68,375			62,038			92,073			94,596			64,622
Shareholders’ Equity	194,127			184,506			179,634			178,867			176,874
Total Assets	2,176,038			2,176,264			2,095,017			2,099,138			2,039,314
Return on Average Assets	0.99		%	1.05		%	1.06		%	0.99		%	1.03		%
Return on Average Equity	11.11		%	12.44		%	12.42		%	11.68		%	11.88		%
Return on Tangible Equity2	12.84		%	14.50		%	14.55		%	13.70		%	13.97		%
Average Earning Assets	$	2,056,841		$	2,064,578		$	1,983,864		$	1,982,691		$	1,922,863
Average Interest-Bearing Liabilities	1,678,080			1,686,993			1,614,873			1,641,300			1,590,401
Interest Income, Tax-Equivalent	17,439			17,633			17,032			16,989			17,059
Interest Expense	1,594			1,713			1,747			2,223			2,239
Net Interest Income, Tax-Equivalent	15,845			15,920			15,285			14,766			14,820
Tax-Equivalent Adjustment	1,173			1,174			1,158			1,180			1,063
Net Interest Margin 3	3.12		%	3.06		%	3.06		%	2.99		%	3.13		%
Efficiency Ratio Calculation:
Noninterest Expense	$	13,466		$	13,385		$	13,133		$	13,274		$	13,411
Less: Intangible Asset Amortization	(106		)	(108		)	(108		)	(112		)	(124		)
Net Noninterest Expense	$	13,360		$	13,277		$	13,025		$	13,162		$	13,287
Net Interest Income, Tax-Equivalent	$	15,845		$	15,920		$	15,285		$	14,766		$	14,820
Noninterest Income	6,886			6,877			6,939			7,071			7,174
Less: Net Securities Gains	—			—			—			(13		)	(527		)
Net Gross Income	$	22,731		$	22,797		$	22,224		$	21,824		$	21,467
Efficiency Ratio	58.77		%	58.24		%	58.61		%	60.31		%	61.90		%
Period-End Capital Information:
Total Stockholders’ Equity (i.e. Book Value)	$	194,491		$	192,154		$	182,683		$	177,607		$	177,803
Book Value per Share	15.75			15.55			14.82			14.46			14.51
Intangible Assets	25,999			26,143			26,273			26,387			26,460
Tangible Book Value per Share 2	13.64			13.43			12.69			12.31			12.35
Capital Ratios:
Tier 1 Leverage Ratio	9.30		%	9.19		%	9.37		%	9.19		%	9.30		%
Tier 1 Risk-Based Capital Ratio	14.55		%	14.70		%	14.59		%	14.82		%	15.15		%
Total Risk-Based Capital Ratio	15.62		%	15.77		%	15.69		%	15.96		%	16.34		%
Assets Under Trust Administration   and Investment Management	$1,182,661			$1,174,891			$1,111,085			$1,073,523			$1,094,708

¹Share and Per Share Data have been restated for the September 27, 2013 2% stock dividend.

²Tangible Book Value and Tangible Equity exclude intangible assets from total equity.  These are non-GAAP financial measures which we believe provide investors with information that is useful in understanding our financial performance (see page 31).

³Net Interest Margin is the ratio of our annualized tax-equivalent net interest income to average earning assets.  This is also a non-GAAP financial measure which we believe provides investors with information that is useful in understanding our financial performance (see page 31).

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Average Consolidated Balance Sheets and Net Interest Income Analysis (see “Use of Non-GAAP Financial Measures” on page 31) (Fully Taxable Basis using a marginal tax rate of 35%) (Dollars In Thousands)
Three-Month Period Ended March 31:	2014								2013
				Interest			Rate					Interest			Rate
	Average			Income/			Earned/		Average			Income/			Earned/
	Balance			Expense			Paid		Balance			Expense			Paid
Interest-Bearing Deposits at Banks	$	17,184		$	13		0.31	%	$	41,145		$	27		0.27	%
Investment Securities:
Fully Taxable	436,477			2,012			1.87		442,671			1,800			1.65
Exempt from Federal Taxes	318,531			2,562			3.26		269,177			2,381			3.59
Loans	1,284,649			12,852			4.06		1,169,870			12,851			4.46
Total Earning Assets	2,056,841			17,439			3.44		1,922,863			17,059			3.60
Allowance for Loan Losses	(14,381		)						(15,307		)
Cash and Due From Banks	30,512								30,635
Other Assets	103,066								101,123
Total Assets	$	2,176,038							$	2,039,314
Deposits:
NOW Accounts	$	857,286		464			0.22		$	791,669		778			0.40
Savings Deposits	510,428			219			0.17		455,311			268			0.24
Time Deposits of $100,000 or More	75,819			230			1.23		91,322			319			1.42
Other Time Deposits	166,172			391			0.95		187,477			554			1.20
Total Interest-Bearing Deposits	1,609,705			1,304			0.33		1,525,779			1,919			0.51
Short-Term Borrowings	28,375			19			0.27		14,622			3			0.08
FHLBNY Term Advances and Other Long-Term Debt	40,000			271			2.75		50,000			317			2.57
Total Interest-Bearing Liabilities	1,678,080			1,594			0.39		1,590,401			2,239			0.57
Demand Deposits	277,884								247,347
Other Liabilities	25,947								24,692
Total Liabilities	1,981,911								1,862,440
Stockholders’ Equity	194,127								176,874
Total Liabilities and Stockholders’ Equity	$	2,176,038							$	2,039,314
Net Interest Income (Tax-equivalent Basis)				15,845								14,820
Reversal of Tax Equivalent Adjustment				(1,173		)	0.23	%				(1,063		)	0.22	%
Net Interest Income				$	14,672							$	13,757
Net Interest Spread							3.05	%							3.03	%
Net Interest Margin							3.12	%							3.13	%

OVERVIEW

We reported net income for the first quarter of 2014 of $5.3 million, representing diluted earnings per share (EPS) of $0.43. This EPS result was an increase of one cent, or 2.4%, from the EPS of $0.42 reported for the first quarter of 2013. Return on average equity (ROE) for the 2014 quarter continued to be strong at 11.11%, although a decrease from the ROE of 11.88% for the quarter ended March 31, 2013. Return on average assets (ROA) for the 2014 first quarter was 0.99%, a decrease from ROA of 1.03% for the quarter ended March 31, 2013. Although net income increased period-to-period, both ROA and REO decreased, reflecting the fact that total assets and total equity grew faster than net income. Net interest income for the 2014 first quarter was $15.8 million on a tax-equivalent basis, an increase of $1.0 million, or 6.9%, from net interest income of $14.8 million for the quarter ended March 31, 2013. The net interest margin decreased from the year-earlier quarter by just one basis point, from 3.13% to 3.12%, however, net interest margin for the first quarter of 2014 exceeded the margins earned in the preceding three quarters. Total assets were $2.222 billion at March 31, 2014, which represented an increase of $57.9 million, or 2.7%, above the level at December 31, 2013, and an increase of $105.6 million, or 5.0%, from the March 31, 2013 level.

The changes in net income, net interest income and net interest margin between the three-month periods are more fully described under the heading "RESULTS OF OPERATIONS," beginning on page 45.

Stockholders’ equity was $194.5 million at March 31, 2014, an increase of $16.7 million, or 9.4%, from the year earlier level. Stockholders' equity was also up $2.3 million, or 1.2%, from the December 31, 2013 level of $192.2 million. The components of the change in stockholders’ equity since year-end 2013 are presented in the Consolidated Statement of Changes in Stockholders’ Equity on page 6, and are discussed in more detail in the next section.

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Regulatory Capital and Increase in Stockholders' Equity: At period-end, we continued to exceed all current regulatory minimum capital requirements at both the holding company and bank levels, by a substantial amount. As of March 31, 2014 both of our banks, as well as our holding company, qualified as "well-capitalized" under federal bank regulatory guidelines. Our regulatory capital levels have consistently remained well in excess of required minimums during recent years, despite the economic downturn, because of our continued profitability and strong asset quality. Even when the new enhanced capital requirements, announced in June 2013, go into effect in 2015, we expect that Arrow and our subsidiary banks will continue to meet all of these enhanced standards. See the discussions of "Two Sets of Current Capital Standards" under the “Current Regulatory Capital Standards" section beginning on page 43, and “Important Future Changes to Regulatory Capital Standards” under the "CAPITAL RESOURCES" section beginning on page 42.

At March 31, 2014, our tangible book value per share (calculated based on stockholders' equity reduced by goodwill and other intangible assets) amounted to $13.64, an increase of $0.21, or 1.6%, from December 31, 2013 and an increase of $1.29, or 10.4%, from the level as of March 31, 2013. Our total stockholders' equity at March 31, 2014 increased 9.4% over the year-earlier level, and our total book value per share increased by 8.5% over the year earlier level. In the past three months, total shareholders' equity increased 1.2% and our total book value per share increase by 1.3%. The increase in stockholders' equity over the first three months of 2014 principally reflected the following factors: (i) $5.3 million net income for the period; (ii) issuance of $579 thousand of common stock through our employee benefit and dividend reinvestment plans and (iii) $241 thousand of unrealized net securities gains; offset in part by (iv) cash dividends of $3.1 million; and (v) repurchases of our own common stock of $1.2 million. As of March 31, 2014, our closing stock price was $26.44, representing a trading multiple of 1.94 to our tangible book value. The Board of Directors declared and the Company paid quarterly cash dividends of $.245 per share for the first three quarters of 2013, as adjusted for a 2% stock dividend distributed September 27, 2013, and cash dividends of $.25 per share for the last quarter of 2013 and the first quarter of 2014.

Loan Quality: The credit quality of our loan portfolio continued to be significantly stronger than the average for our peer group of U.S. bank holding companies with $1 billion to $3 billion in total assets (see page 30 for information on how we define our peer group).

Our net charge-offs for the first quarter of 2014 were $256 thousand as compared to $795 thousand for the 2013 quarter. In the first quarter of 2013, we charged-off one commercial loan for $753 thousand, which had been fully reserved at December 31, 2012. This charge-off led to an annualized ratio of charge-offs to average loans for the 2013 first quarter of 0.28%. However, our charge-off totals in the three ensuing quarters of 2013 were much lower. By December 31, 2013, our full year charge-off ratio was down to 0.09%. By contrast, our peer group's ratio of net charge-offs to average loans for 2013 was 0.25%. Our ratio of net charge-offs to average loans (annualized) for the first quarter of 2014 was 0.08%. At March 31, 2014, our allowance for loan losses was $14.6 million representing 1.12% of total loans, down two basis points from the December 31, 2013 ratio, due to the improving credit quality in the loan portfolio.

Nonperforming loans were $7.0 million at March 31, 2014, representing 0.53% of period-end loans. By way of comparison, this ratio for our peer group was 1.46% at December 31, 2013, and this peer ratio represented a significant improvement from the peer group's ratios of earlier years. For example, our peer group's nonperforming loans ratio was 3.60% at year-end 2010, the high-point after the onset of the 2008 recession, while our ratio remained quite low and stable throughout that period.

During the first three months of 2014, we experienced increases in outstanding balances of all three of our major loan portfolio segments, without any significant deterioration in our credit quality:

Commercial Loans: These loans comprised approximately 33% of our loan portfolio at period-end. Current unemployment rates in our region remain elevated from pre-crisis levels, although the local economy continues to be stable and in some areas recovering. Similarly, commercial property values in our region remain stable, and have not showed significant deterioration, even in the worst phases of the financial crisis. We update the appraisals on our nonperforming and watched commercial loan properties as deemed necessary, usually when the loan is downgraded or when we perceive significant market deterioration since our last appraisal.

Residential Real Estate Loans: These loans, including home equity loans, made up approximately 36% of our portfolio at period-end. The residential real estate market in our service area has been stable in recent periods. Throughout the financial crisis, we have not experienced a notable increase in our foreclosure or loss rates on our residential real estate loans, primarily due to the fact that we never have originated or participated in underwriting high-risk mortgage loans, such as so called “Alt A,” “negative amortization,” “option ARM's” or “negative equity” loans. We originated all of the residential real estate loans currently held in our portfolio and apply conservative underwriting standards to our originations.

Automobile Loans (Primarily Through Indirect Lending): These loans comprised approximately 31% of our loan portfolio. In the first quarter, we did not experience any significant change in our delinquency rate or level of nonperforming loans.

Liquidity and Access to Credit Markets: We have not experienced any liquidity problems or special concerns during 2014 to date, nor did we during 2013 or 2012. The terms of our lines of credit with our correspondent banks, the FHLBNY and the Federal Reserve Bank have not changed. In general, we rely on asset-based liquidity (i.e., funds in overnight investments and cash flow from maturing investments and loans) with liability-based liquidity as a secondary source (our main liability-based sources are overnight borrowing arrangements with our correspondent banks, term credit arrangement advances from the FHLBNY and the Federal Reserve Bank discount window). During the recent financial crisis, many financial institutions, small and large, relied extensively on the Fed's discount window to support their liquidity positions, but we had no such need. We regularly perform a liquidity stress test and periodically test our contingent liquidity plan to ensure that we can generate an adequate amount of available funds to meet a wide variety of potential liquidity crises, including a severe crisis.

VISA Class B Common Stock: We continue to believe, that the multi-billion dollar balance that Visa maintains in its escrow fund is substantially sufficient to satisfy the contingent liability of the Visa member banks, including the Company's share of such liability, for the remaining covered litigation. The Company continues not to recognize any economic value for its remaining shares of Visa Class B common stock.

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CHANGE IN FINANCIAL CONDITION

Summary of Selected Consolidated Balance Sheet Data

(Dollars in Thousands)

	At Period-End						$ Change			$ Change			% Change		% Change
	March 31, 2014		December 31, 2013		March 31, 2013		From December			From March			From December		From March
Interest-Bearing Bank Balances	$	35,994	$	12,705	$	113,231	$	23,289		$	(77,237	)	183.3	%	(68.2	)%
Securities Available-for-Sale	429,230		457,606		478,775		(28,376		)	(49,545		)	(6.2	)%	(10.3	)%
Securities Held-to-Maturity	317,632		299,261		251,456		18,371			66,176			6.1	%	26.3	%
Loans (1)	1,310,423		1,266,472		1,164,759		43,951			145,664			3.5	%	12.5	%
Allowance for Loan Losses	14,636		14,434		14,603		202			33			1.4	%	0.2	%
Earning Assets (1)	2,097,175		2,042,325		2,012,714		54,850			84,461			2.7	%	4.2	%
Total Assets	2,221,581		2,163,698		2,115,962		57,883			105,619			2.7	%	5.0	%
Demand Deposits	277,086		278,958		254,308		(1,872		)	22,778			(0.7	)%	9.0	%
NOW Accounts	908,028		817,366		845,531		90,662			62,497			11.1	%	7.4	%
Savings Deposits	524,670		498,779		476,115		25,891			48,555			5.2	%	10.2	%
Time Deposits of $100,000 or More	74,127		78,928		89,797		(4,801		)	(15,670		)	(6.1	)%	(17.5	)%
Other Time Deposits	164,108		168,299		185,455		(4,191		)	(21,347		)	(2.5	)%	(11.5	)%
Total Deposits	$	1,948,019	$	1,842,330	$	1,851,206	$	105,689		$	96,813		5.7	%	5.2	%
Federal Funds Purchased and   Securities Sold Under Agreements   to Repurchase	$	13,787	$	11,777	$	12,166	$	2,010		$	1,621		17.1	%	13.3	%
FHLB Advances - Overnight	—		53,000		—		(53,000		)	—			(100.0	)%	100.0	%
FHLB Advances - Term	20,000		20,000		30,000		—			(10,000		)	—	%	(33.3	)%
Stockholders' Equity	194,491		192,154		177,803		2,337			16,688			1.2	%	9.4	%

(1) Includes Nonaccrual Loans

Municipal Deposits:Fluctuations in balances of our NOW accounts and time deposits of $100,000 or more are largely the result of municipal deposit seasonality factors. Over the past twelve months, municipal deposits on average have ranged from 27% to over 34% of our total deposits. As of March 31, 2014, municipal deposits represented 33.6% of total deposits. Municipal deposits typically are invested in NOW accounts and time deposits of short duration. Many of our municipal deposit relationships are subject to annual renewal, by formal or informal agreement.

In general, there is a seasonal pattern to municipal deposits starting with a low point during July and August. Account balances tend to increase throughout the fall and remain elevated during the winter months, due to tax deposits, and generally receive an additional boost at the end of March from the electronic deposit of state aid to school districts. In addition to these seasonal fluctuations within accounts, the overall level of municipal deposit balances fluctuates from year-to-year as some municipalities move their accounts in and out of our banks due to competitive factors. Often, the balances of municipal deposits at the end of a quarter are not representative of the average balances for that quarter.

The recent financial crisis had a significant negative impact on municipal tax revenues in many regions, and consequently on municipal funds available for deposit. To date, this has not resulted in either a sustained decrease in municipal deposit levels at our banks, adjusted for seasonal fluctuations (in fact, we have experienced an increase in such deposits in 2014 - see following paragraph), or an overall increase in the average rate we pay on such deposits (despite the continuing strong competition for such deposits). However, if interest rates begin to rise significantly or the competition for municipal deposits otherwise becomes more intense, we may experience either or both of these adverse developments in the future.

Changes in Sources of Funds: In recent periods, for cost reasons and because of the sustained growth of customer deposits even at very low rates, we have lessened our reliance on wholesale funding sources and increased our reliance on customer deposits as a source of day-to-day funding. Our total deposits increased$105.7 million, or 5.7%, from December 31, 2013 to March 31, 2014, mainly due to an increase in our municipal deposits. Our non-municipal deposit balances remained stable over the past three months, although we are still experiencing a shift in balances from time deposits to savings accounts. At March 31, 2014 we held a small amount of overnight funds, while we held $53.0 million of overnight funds (obtained from the FHLB) at December 31, 2013. At March 31, 2014, our term advances from the FHLB were $20.0 million, unchanged from year-end.

Changes in Earning Assets: Our loan portfolio increased by $44.0 million, or 3.5%, from December 31, 2013 to March 31, 2014. We experienced the following trends in our three largest segments:

1. Commercial and commercial real estate loans. Period-end balances for this segment increased $22.9 million, or 5.7%, from the December 31, 2013 total. Demand generally continued to be moderate.

2. Residential real estate loans. The period-end balance increased by $14.5 million, or 3.1% from December 31, 2013. We continued to sell some of our residential mortgage originations during the three-month period to Freddie Mac, although a smaller percentage than we sold in the same period last year. Demand for new mortgage loans was modest throughout the period.

3. Automobile loans (primarily indirect loans). The balance of these loans at March 31, 2014, increased by $6.4 million, or 1.6% from the December 31, 2013 balance, reflecting a modest resurgence of automobile sales region-wide and an expansion of our dealer

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network for indirect lending, offset in part by the effects of a cold and snowy winter in the northeast, which depressed auto sales region-wide.

Most of our incoming cash flows for the first three months of 2014 came from the increase in deposit balances and secondarily from maturing investments. During that period, in addition to funding loan growth, we utilized a portion of the cash flow from maturing investments to purchase $52.2 million of securities in the held-to-maturity and available-for-sale portfolios. The investment securities portfolio decreased by a net of $5.1 million during the quarter.

Deposit Trends

The following two tables provide information on trends in the balance and mix of our deposit portfolio by presenting, for each of the last five quarters, the quarterly average balances by deposit type and the percentage of total deposits represented by each deposit type.

Quarterly Average Deposit Balances

(Dollars in Thousands)

	Quarter Ended
	3/31/2014		12/31/2013		9/30/2013		6/30/2013		3/31/2013
Demand Deposits	$	277,884	$	279,967	$	277,381	$	254,642	$	247,347
NOW Accounts	857,286		855,106		749,654		796,330		791,669
Savings Deposits	510,428		517,542		509,014		479,480		455,311
Time Deposits of $100,000 or More	75,819		81,804		85,757		87,059		91,322
Other Time Deposits	166,172		170,503		178,375		183,835		187,477
Total Deposits	$	1,887,589	$	1,904,922	$	1,800,181	$	1,801,346	$	1,773,126

Percentage of Total Quarterly Average Deposits

	Quarter Ended
	3/31/2014		12/31/2013		09/30/2013		06/30/2013		03/31/2013
Demand Deposits	14.7	%	14.7	%	15.4	%	14.2	%	13.9	%
NOW Accounts	45.5		44.8		41.6		44.2		44.6
Savings Deposits	27.0		27.2		28.3		26.6		25.7
Time Deposits of $100,000 or More	4.0		4.3		4.8		4.8		5.2
Other Time Deposits	8.8		9.0		9.9		10.2		10.6
Total Deposits	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

For a variety of reasons, we typically experience little growth in average deposit balances in the first quarter of each calendar year (even though municipal balances tend to grow sharply at the very end of the first quarter), little net growth or a small contraction in the second quarter of the year (when municipal deposits normally drop off), and resuming growth in the third and fourth quarters (when municipal deposits tend to increase, sometimes substantially, to and through year-end). This pattern has held true in recent periods. Growth in average deposit balances during the first quarter of 2014 over the first quarter of 2013 came from both municipal and non-municipal depositors.

Quarterly Cost of Deposits

	Quarter Ended
	3/31/2014		12/31/2013		9/30/2013		6/30/2013		3/31/2013
Demand Deposits	—	%	—	%	—	%	—	%	—	%
NOW Accounts	0.22		0.22		0.22		0.40		0.40
Savings Deposits	0.17		0.18		0.19		0.23		0.24
Time Deposits of $100,000 or More	1.23		1.34		1.37		1.41		1.42
Other Time Deposits	0.95		1.01		1.05		1.10		1.20
Total Deposits	0.28		0.30		0.32		0.42		0.44

In keeping with industry trend lines, average rates paid by us on deposits decreased steadily over the five quarters ending March 31, 2014, for deposits generally and virtually all deposit categories, although the rate of decrease slowed in the most recent quarters. Over the same period, our average yield on loans also decreased, for loans generally and almost all loan categories (see "Quarterly Taxable Equivalent Yield on Loans," page 38). The decrease in the cost of our NOW accounts from the second quarter of 2013 to the third quarter of 2013 was primarily attributable to a decrease in the rates paid on a large portion of our municipal NOW accounts, which had come up for repricing at quarter-end.

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Non-Deposit Sources of Funds

We have several sources of funding other than deposits. Historically, we have borrowed funds from the Federal Home Loan Bank ("FHLB") under a variety of programs, including fixed and variable rate short-term borrowings and borrowings in the form of "structured advances." These structured advances typically have original maturities of 3 to 10 years and are callable by the FHLB at certain dates. If the advances are called, we may elect to receive replacement advances from the FHLB at the then prevailing FHLB rates of interest. In recent periods, we have reduced our utilization of FHLB advances as a source of funds.

We have also utilized, in the past, the issuance of trust preferred securities (or TRUPs) to supplement our funding needs. The $20 million of Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts (i.e., TRUPs) listed on our consolidated balance sheet as of March 31, 2014 currently qualify as Tier 1 regulatory capital under regulatory capital adequacy guidelines, as discussed under “Capital Resources” beginning on page 42 of this Report. These trust preferred securities are subject to early redemption by us if the proceeds cease to qualify as Tier 1 capital of Arrow for any reason, or if certain other unanticipated but negative events should occur, such as any adverse change in tax laws that denies the Company the ability to deduct interest paid on these obligations for federal income tax purposes. Under Dodd-Frank, no future issuances of TRUPs by banking organizations of our size will qualify as Tier 1 regulatory capital. Under the final bank capital rules recently issued by the federal bank authorities pursuant to Dodd-Frank, our TRUPs will be eligible for treatment as Tier 1 capital until they mature or are earlier redeemed by us.

Loan Trends

The following two tables present, for each of the last five quarters, the quarterly average balances by loan type and the percentage of total loans represented by each loan type.

Quarterly Average Loan Balances

(Dollars in Thousands)

	Quarter Ended
	3/31/2014		12/31/2013		9/30/2013		6/30/2013		3/31/2013
Commercial and Commercial Real Estate	$	412,507	$	397,503	$	386,973	$	379,533	$	381,281
Residential Real Estate	332,142		322,080		316,582		305,222		308,091
Home Equity	103,694		99,722		94,726		91,339		88,926
Consumer Loans - Automobile	409,723		408,273		398,329		380,993		363,120
Other Consumer Loans (1)	26,583		27,379		28,230		27,954		28,452
Total Loans	$	1,284,649	$	1,254,957	$	1,224,840	$	1,185,041	$	1,169,870

Percentage of Total Quarterly Average Loans

	Quarter Ended
	3/31/2014		12/31/2013		9/30/2013		6/30/2013		3/31/2013
Commercial and Commercial Real Estate	32.1	%	31.7	%	31.6	%	32.0	%	32.6	%
Residential Real Estate	25.9		25.6		25.9		25.7		26.4
Home Equity	8.1		8.0		7.7		7.7		7.6
Consumer Loans - Automobile	31.9		32.5		32.5		32.2		31.0
Other Consumer Loans (1)	2.0		2.2		2.3		2.4		2.4
Total Loans	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

⁽¹⁾ The category “Other Consumer Loans”, in the tables above, includes home improvement loans secured by mortgages, which are otherwise reported with residential real estate loans in tables of period-end balances.

Maintenance of High Quality in the Loan Portfolio

For many reasons, including our conservative credit underwriting standards, we largely avoided the negative impact on asset quality that many other banks suffered during the financial crisis. From the start of the crises through the date of this Report, we have not experienced a significant deterioration in our loan portfolios. In general, we underwrite our residential real estate loans to secondary market standards for prime loans. We have never engaged in subprime mortgage lending as a business line, whether in residential mortgage loans, car loans or other consumer loans. We never extended or purchased any so-called "Alt-A", "negative amortization", "option ARM", or "negative equity" mortgage loans. On occasion we have made loans to borrowers having a FICO score of 650 or below, where special circumstances justify doing so, or have had extensions of credit outstanding to borrowers who have developed credit problems after origination resulting in deterioration of their FICO scores.

Residential Real Estate Loans: In recent years, residential real estate and home equity loans have represented the largest single segment of our loan portfolio (comprising approximately 36% of the entire portfolio at March 31, 2014), eclipsing both our commercial and commercial real estate loans (33% of the portfolio) and automobile loans (31% of the portfolio). Our gross originations for residential real estate loans (including refinancings of mortgage loans) were $26.7 million and $30.3 million for the first quarters of 2014 and 2013, respectively. These origination totals exceeded the sum of repayments and prepayments in the respective quarters, but we also sold some of these originations, in the 2013 quarter, a significant portion thereof, on or immediately after, origination. In the first quarter of 2013, we sold $20.8 million, or 68.7% of our originations during the quarter, whereas in the first quarter of 2014, we only sold $4.2 million, or 15.7% of our originations. During 2014, we introduced competitive products for variable rate residential real estate and construction loans. We

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did not sell any of these variable rate loans to the secondary market. Also during 2014, we began to experience a decline in refinance activity and an increase in purchase-money originations.

Even though short-term rates have remained very low since 2008, rates on conventional real estate mortgages have fluctuated over the past few years in response to several programs taken by the Federal Reserve. If the current low-rate environment for newly originated residential real estate loans persists, we may continue to sell a significant portion of our loan originations and, as a result, may even experience a decrease in our outstanding balances in this segment of our portfolio. Moreover, if our local economy or real estate market suffers major downturns, the demand for residential real estate loans in our service area may decrease, which also may negatively impact our real estate portfolio and our financial performance. Management believes it is not possible at this point to project whether mortgage rates or interest rates generally will experience a meaningful and substantial increase in upcoming periods, or what the overall effect of such an increase will be on our mortgage loan portfolio or our loan portfolio generally, or on our net interest income, net income or financial results, in upcoming periods.

Commercial, Commercial Real Estate and Commercial Construction Loans: Over the last decade, we have experienced moderate and occasionally strong demand for commercial and commercial real estate loans. These loan balances have generally increased, both in dollar amount and as a percentage of the overall loan portfolio. For the first quarter of 2014, loan growth was strong in this category, as outstanding balances increased by $22.9 million over the December 31, 2013 level, enhanced by a couple of large offerings.

Substantially all commercial and commercial real estate loans in our portfolio were extended to businesses or borrowers located in our regional market. Many of the loans in the commercial portfolio have variable rates tied to prime, FHLBNY rates or U.S. Treasury indices. We have not experienced any significant weakening in the quality of our commercial loan portfolio in recent years.

It is entirely possible, however, that we may experience a reduction in the demand for such loans and/or a weakening in the quality of our commercial and commercial real estate loan portfolio in upcoming periods. Generally, however, the business sector, at least in our service area, appeared to be in reasonably good financial condition at period-end.

Automobile Loans (primarily through indirect lending): At March 31, 2014, our automobile loans (primarily loans originated through dealerships located in upstate New York) represented the third largest category of loans in our portfolio, and continued to be a significant component of our business comprising almost a third of the portfolio.

Beginning in 2012, there was a nation-wide resurgence in automobile sales, due in the view of many to an aging fleet and a modest resurgence in consumer optimism. Although our new automobile loan volume for the first three months of 2014 slowed down somewhat due to a cold and snowy winter, our automobile loan portfolio still grew by $6.4 million, or 1.6%

There was no significant change in net charge-offs on automobile loans for the first quarter of 2014. Our experienced lending staff not only utilizes credit evaluation software tools but also reviews and evaluates each loan individually. We believe our disciplined approach to evaluating risk has contributed to maintaining our strong loan quality in this portfolio. If weakness in auto demand returns, our portfolio is likely to experience limited, if any, overall growth, either in real terms or as a percentage of the total portfolio, regardless of whether the auto company lending affiliates are offering highly-subsidized loans.

The following table indicates the annualized tax-equivalent yield of each loan category for the past five quarters.

Quarterly Taxable Equivalent Yield on Loans

	Quarter Ended
	3/31/2014		12/31/2013		9/30/2013		6/30/2013		3/31/2013
Commercial and Commercial Real Estate	4.49	%	4.65	%	4.52	%	4.61	%	4.74	%
Residential Real Estate	4.55		4.53		4.62		4.75		4.93
Home Equity	2.95		2.94		2.98		3.00		3.03
Automobile	3.41		3.54		3.68		3.83		3.97
Other Consumer Loans	5.54		5.72		5.95		5.97		6.16
Total Loans	4.06		4.15		4.18		4.30		4.46

In summary, average yields in our loan portfolio have steadily declined over the last year, dropping 40 basis points, or 9.0%, from the first quarter of 2013 to the first quarter of 2014, as a result of the continuing downward pressured on all portfolio yields resulting principally from the Federal Reserve's multi-year policy of generating and maintaining ultra-low rates, on both short-term and long-term debt, as well as continuing competition for loans from other lenders. To the extent that this declining rate environment may be "bottoming out" or even in the early stages of reversing itself, due to recent Federal Reserve tapering off of monetary easing, the impact of such a change, if it is in fact occurring, has not yet revealed itself in our loan portfolio. Nor would we expect that any bottoming out of prevailing rates would have an immediate impact on our portfolio yields generally.

In the first quarter of 2014, the average yield on our loan portfolio declined by 9 basis points from the last quarter of 2013, from 4.15% to 4.06%. The decrease was exacerbated by extremely competitive pressures on rates for new commercial and commercial real estate loans (a 16 basis point decrease from the prior quarter), as well as on rates for automobile loans (a 13 basis point decrease from the prior quarter). However, the yield on our residential real estate portfolio held steady, and even increased by 2 basis points. The 9 basis point decrease in average yield on our total loan portfolio in the just-completed quarter, as compared to the fourth quarter of 2013, was not matched by the decrease in our average cost of deposits during the quarter, which was only 2 basis points. Despite the more rapid drop in average loan yield than average deposit cost, our net-interest margin in the first quarter of 2014 increased by 6 basis points over the net interest margin in the fourth quarter of 2013, from 3.06% to 3.12%.

In general, the yield (tax-equivalent interest income divided by average loans) on our loan portfolio and other earning assets has been impacted by changes in prevailing interest rates. We expect that such will likely continue to be the case; that is, that loan yields will continue to rise and fall with changes in prevailing market rates, although the timing and degree of responsiveness will be influenced by a variety

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of other factors, including the extent of federal government and Federal Reserve participation in the home mortgage market, the makeup of our loan portfolio, the shape of the yield curve, consumer expectations and preferences, and the rate at which the portfolio expands. Additionally, there is a significant amount of cash flow from normal amortization and prepayments in all loan categories, and much of this cash flow reprices at current rates for credit, as new loans are generated at the current yields. Thus, even if prevailing rates for loans stabilize in upcoming periods, our average rate on our portfolio may continue to decline as older credits in our portfolio bearing generally higher rates continue to mature and roll over or are redeployed into lower priced loans.

Investment Portfolio Trends

The following table presents the changes in the period-end balances for the securities available-for-sale and the securities held-to-maturity investment portfolios from December 31, 2013 to March 31, 2014 (in thousands):

	Fair Value at Period-End							Net Unrealized Gain (Loss)
	03/31/2014		12/31/2013		Change			03/31/2014			12/31/2013			Change
Securities Available-for-Sale:
U.S. Agency Securities	$	121,220	$	136,475	$	(15,255	)	$	(257	)	$	(393	)	$	136
State and Municipal Obligations	125,410		127,389		(1,979		)	245			165			80
Mortgage-Backed Securities-Residential	164,541		175,778		(11,237		)	4,518			4,457			61
Corporate and Other Debt Securities	16,839		16,798		41			(276		)	(344		)	68
Mutual Funds and Equity Securities	1,220		1,166		54			100			46			54
Total	$	429,230	$	457,606	$	(28,376	)	$	4,330		$	3,931		$	399
Securities Held-to-Maturity:
State and Municipal Obligations	$	195,524	$	202,390	$	(6,866	)	$	4,677		$	4,184		$	493
Mortgage-Backed Securities-Residential	125,811		98,915		26,896			26			(1,140		)	1,166
Corporate and Other Debt Securities	1,000		1,000		—			—			—			—
Total	$	322,335	$	302,305	$	20,030		$	4,703		$	3,044		$	1,659

At period end, we held no investment securities in our portfolio that consisted of or included, directly or indirectly, obligations of foreign governments or governmental agencies or foreign issues of any sort.

As of both period-ends presented in the above table, all listed mortgage-backed securities and collateralized mortgage obligations (CMO’s) in our portfolio were guaranteed by U.S. agency and government sponsored enterprises (GSEs), such as Fannie Mae or Freddie Mac. Mortgage-backed securities provide to the investor monthly portions of principal and interest payments pursuant to the contractual obligations of the underlying mortgages. In the case of most CMOs, the principal and interest payments on the pooled mortgages are separated into two or more components (tranches), with each tranche having a separate estimated life, risk profile and yield. Our practice has been to purchase only those CMOs that are guaranteed by GSEs or other federal agencies and only those tranches with shorter maturities and no more than moderate extension risk. Included in corporate and other debt securities are trust preferred securities issued by other financial institutions that were highly rated at the time of purchase.

Other-Than-Temporary Impairment

Each quarter we evaluate all investment securities with a fair value less than amortized cost, both in the available-for-sale portfolio and the held-to-maturity portfolio, to determine if there exists other-than-temporary impairment for any such security as defined under generally accepted accounting principles. There were no other-than-temporary impairment losses in the first three months of 2014.

Increase in Net Unrealized Securities Gains: Nearly all of the change in our net unrealized gains or losses is attributable to changes in the yield curve between the two period-ends, that is, there has been little or no change in the credit-worthiness of the issuers.

Investment Sales, Purchases and Maturities

(In Thousands)

	Three Months Ended
Sales	03/31/2014		03/31/2013
Available-For-Sale Portfolio:
Mortgage-Backed Securities-Residential	$	—	$	10,666
U.S. Agency Securities	—		5,057
Other	—		11
Total	—		15,734
Net Gains on Securities Transactions	—		527
Proceeds on the Sales of Securities	$	—	$	16,261

In recent periods, the steady decline in prevailing interest rates to historically low levels increased the likelihood of greater mortgage refinancing activity. We regularly review our holdings of collateralized mortgage obligations for those mortgages that revealed higher credit scores and/or moderate loan-to-value ratios, i.e., where refinancing may appear to be a greater probability. We have also reviewed the

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underlying prepayment speed of individual issues to identify mortgage pools that were experiencing accelerating principal payments. In 2013 we selectively sold collateralized mortgage obligations that were experiencing accelerating prepayments speeds and that were also selling at a premium, so as to capture the gain since prepayments (redemptions) of such securities typically are at par. If the multi-year widespread decline in mortgage rates may in fact be ending, and/or if such rates may now begin to increase, we would expect that refinancings as well as pre-payments of outstanding mortgage loans, including those in our portfolio, may diminish in upcoming periods, as would our anticipatory sales of loans that we deem likely to be refinanced or prepaid.

Investment Purchases - Available-for-Sale Portfolio

	Three Months Ended
	03/31/2014		03/31/2013
Purchases
U.S. Agency Securities	$	12,586	$	15,000
State and Municipal Obligations	4,308		20,677
Mortgage-Backed Securities-Residential	—		—
Other	11		4,251
Total Purchases	$	16,905	$	39,928
Maturities & Calls	$	44,907	$	22,846

Investment Purchases - Held-to-Maturity Portfolio

	Three Months Ended
	03/31/2014		03/31/2013
Purchases
State and Municipal Obligations	$	5,891	$	18,930
Mortgage-Backed Securities-Residential	29,437		—
Total Purchases	$	35,328	$	18,930
Maturities & Calls	$	16,561	$	6,815

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Asset Quality

The following table presents information related to our allowance and provision for loan losses for the past five quarters.

Summary of the Allowance and Provision for Loan Losses

(Dollars in Thousands, Loans Stated Net of Unearned Income)

	3/31/2014			12/31/2013			9/30/2013			6/30/2013			3/31/2013
Loan Balances:
Period-End Loans	$	1,310,423		$	1,266,472		$	1,243,370		$	1,204,734		$	1,164,759
Average Loans, Year-to-Date	1,284,649			1,208,954			1,193,452			1,177,498			1,169,870
Average Loans, Quarter-to-Date	1,284,649			1,254,957			1,224,840			1,185,041			1,169,870
Period-End Assets	2,221,581			2,163,698			2,156,858			2,083,169			2,115,962
Allowance for Loan Losses, Year-to-Date:
Allowance for Loan Losses, Beginning of Period	$	14,434		$	15,298		$	15,298		$	15,298		$	15,298
Provision for Loan Losses, YTD	458			200			200			200			100
Loans Charged-off, YTD	(336		)	(1,411		)	(1,165		)	(982		)	(890		)
Recoveries of Loans Previously Charged-off	80			347			251			162			95
Net Charge-offs, YTD	(256		)	(1,064		)	(914		)	(820		)	(795		)
Allowance for Loan Losses, End of Period	$	14,636		$	14,434		$	14,584		$	14,678		$	14,603
Allowance for Loan Losses, Quarter-to-Date:
Allowance for Loan Losses, Beginning of Period	$	14,434		$	14,584		$	14,678		$	14,603		$	15,298
Provision for Loan Losses, QTD	458			—			—			100			100
Loans Charged-off, QTD	(336		)	(246		)	(183		)	(92		)	(890		)
Recoveries of Loans Previously Charged-off	80			96			89			67			95
Net Charge-offs, QTD	(256		)	(150		)	(94		)	(25		)	(795		)
Allowance for Loan Losses, End of Period	$	14,636		$	14,434		$	14,584		$	14,678		$	14,603
Nonperforming Assets, at Period-End:
Nonaccrual Loans	$	6,284		$	6,479		$	6,171		$	5,591		$	5,218
Restructured	380			641			446			461			473
Loans Past Due 90 or More Days   and Still Accruing Interest	347			652			927			760			259
Total Nonperforming Loans	7,011			7,772			7,544			6,812			5,950
Repossessed Assets	138			63			18			34			45
Other Real Estate Owned	198			81			481			1,141			1,149
Total Nonperforming Assets	$	7,347		$	7,916		$	8,043		$	7,987		$	7,144
Asset Quality Ratios:
Allowance to Nonperforming Loans	208.76		%	185.71		%	193.32		%	215.47		%	245.43		%
Allowance to Period-End Loans	1.12			1.14			1.17			1.22			1.25
Provision to Average Loans (Quarter) (1)	0.14			—			—			0.03			0.03
Provision to Average Loans (YTD) (1)	0.14			0.02			0.02			0.03			0.03
Net Charge-offs to Average Loans (Quarter) (1)	0.08			0.05			0.03			0.01			0.28
Net Charge-offs to Average Loans (YTD) (1)	0.08			0.09			0.10			0.14			0.28
Nonperforming Loans to Total Loans	0.53			0.61			0.61			0.57			0.51
Nonperforming Assets to Total Assets	0.33			0.37			0.37			0.38			0.34
(1) Annualized

Provision for Loan Losses

Through the provision for loan losses, an allowance is maintained that reflects our best estimate of probable incurred loan losses related to specifically identified impaired loans as well as the inherent risk of loss related to the remaining portfolio. Loan charge-offs are recorded to this allowance when loans are deemed uncollectible, in whole or in part.

In the first quarter of 2014, we made a $458 thousand provision for loan losses, compared to provisions of $100 thousand for the first and second quarters of 2013 and no provisions for the third and fourth quarters of 2013. A variety of factors and events during the 2014 quarter drove the amount of the provision including net decreases in qualitative factors, a slight decrease in the volume of criticized loans, offset by a small increase in historical loss factors and an increase in loan balances.

.

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The ratio of the allowance for loan losses to total loans was 1.12% at March 31, 2014, down two basis points from 1.14% at December 31, 2013. The decline in the allowance for loan losses as a percentage of total loans was principally due to improvements in several key credit quality measurements. During the quarter, internally classified loans (loans rated special mention, substandard or doubtful) as a percentage of total loans decreased, the percentage of nonperforming loans to total loans decreased and the ratio of net charge-offs to average loans held steady. The overall size of the allowance grew however, due to loan portfolio growth.

    We consider our accounting policy relating to the allowance for loan losses to be a critical accounting policy, given the uncertainty involved in evaluating the level of the allowance required to cover credit losses inherent in the loan portfolio, and the material effect that such judgments may have on our results of operations. Our process for determining the provision for loan losses is described in Note 3 to our unaudited interim consolidated financial statements.

Risk Elements

Our nonperforming assets at March 31, 2014 amounted to $7.3 million, a decrease of $0.6 million, or 7.2%, from the December 31, 2013 total and an increase of $203 thousand or 2.8%, from the year earlier total. Our recent levels of nonperforming assets remain significantly below our peer group averages for the corresponding dates. At March 31, 2014, our ratio of loans past due 90 or more days plus nonaccrual loans plus other real estate owned to total assets was .33%, nearly unchanged from our ratio at March 31, 2013 . Both ratios are well below the ratio of 1.45% for our peer group at December 31, 2013 (the latest date for which peer group information is available).

The following table presents the balance of other non-current loans at period-end as to which interest income was being accrued (i.e. loans 30 to 89 days past due, as defined in bank regulatory guidelines). These non-current loans are not included in our nonperforming assets but entail heightened risk.

Loans Past Due 30-89 Days and Accruing Interest
	3/31/2014		12/31/2013		3/31/2013
Commercial Loans	$	1,028	$	905	$	849
Commercial Real Estate Loans	1,373		1,400		1,551
Other Consumer Loans	89		56		36
Automobile Loans	3,124		4,229		2,300
Residential Real Estate Loans	2,104		1,698		2,481
Total Delinquent Loans	$	7,718	$	8,288	$	7,217

At March 31, 2014, our loans in this category totaled $7.7 million, or 0.59% of loans then outstanding, a decrease of $570 thousand, or 6.9%, from the $8.3 million of such loans at December 31, 2013. The year-end 2013 total equaled .65% of loans then outstanding. The decrease from December 31, 2013 is primarily attributable to a decrease in the delinquencies of automobile loans, which were unusually high at year-end.

The number and dollar amount of our performing loans that demonstrate characteristics of potential weakness from time-to-time (potential problem loans) typically is a very small percentage of our portfolio. See the table of Credit Quality Indicators in Note 3 to the Financial Statements. We consider all performing commercial and commercial real estate loans classified as substandard or lower (as reported in Note 3) to be potential problem loans. The dollar amount of such loans at March 31, 2014 ($25.2 million) was down slightly from the dollar amount of such loans at December 31, 2013 ($25.4 million) and March 31, 2013 ($27.3 million). The amount of such loans depends principally on economic conditions in our geographic market area of northeastern New York State. The economy in this area has been relatively strong in recent years, but any general weakening of the U.S. economy in upcoming periods would likely have an adverse effect on the economy in our market area as well, and on our commercial and commercial real estate portfolio.

As of March 31, 2014, we held for sale three real estate properties in other real estate owned. As a result of our conservative underwriting standards, we do not expect to acquire a significant number of other real estate properties in the near term as a result of payment defaults or the foreclosure process, nor do we expect significant losses to be incurred generally in our residential real estate portfolio.

We do not currently anticipate significant increases in our nonperforming assets, other non-current loans as to which interest income is still being accrued or potential problem loans, but can give no assurances in this regard.

CAPITAL RESOURCES

Important Future Changes to Regulatory Capital Standards (To Be Phased-In from 2015 to 2019)

Please see our discussion in our Form 10-K for December 31, 2013 on the impact of the Dodd-Frank Act on regulatory capital standards for U.S. insured depository financial institutions, and specifically, on the new higher regulatory capital standards that are being imposed on banks by bank regulators in July 2013.

In general, the new standards, which will begin to take effect for banking organization like us in 2015, expand the risk-weighted categories of assets and add a new capital ratio, a "common equity tier 1 capital ratio" (CET1). In addition to setting higher minimum capital ratios, the new rules, as part of their general thrust in requiring enhanced capital for all banks, introduce a new concept, a so-called "capital conservation buffer" (set to reach 2.5% in 2019), which will be added over a phase-in period to each of the new minimum capital ratios (which by themselves are somewhat higher than the current minimum ratios).

Under the new rules, grandfathered TRUPs, such as Arrow's outstanding TRUP's, will continue to qualify as tier 1 capital, up to a limit of 25% of tier 1 capital (including such TRUP's and other grandfathered tier 1 capital components), until the TRUPs mature or are redeemed. Also under the new rules, accumulated other comprehensive income (AOCI) may be deducted from capital, if the organization

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exercises its irrevocable option not to include AOCI in capital. We estimate that if the new capital rules, which are being phased-in from 2015 through 2019, had been effective on March 31, 2014, our holding company and each of our banks would have met each of the proposed minimums under the new rules, including the capital conservation buffer.

Current Regulatory Capital Standards

The discussion and disclosure below on current regulatory capital standards is qualified in its entirety by reference to the fact that, as discussed above, new, more stringent regulatory capital standards have recently been issued by bank regulators, as required under the Dodd-Frank Act, and will soon become effective, although many of the new standards will only be phased in over an extended time period, as described above.

Regulatory capital, although a financial measure that is not provided for or governed by GAAP, nevertheless has been exempted by the SEC from the definition of "non-GAAP financial measures" in the SEC's Regulation G governing disclosure by registered companies of non-GAAP financial measures. Thus, certain information which is generally required to be presented in connection with our disclosure of non-GAAP financial measures need not be provided, and has not been provided, for the regulatory capital measures discussed below.

Two Sets of Current Capital Standards: Our holding company and our subsidiary banks are currently subject to two sets of regulatory capital measures, risk-based capital guidelines and a leverage ratio test. The risk-based guidelines assign risk weightings to all assets and certain off-balance sheet items of financial institutions, which generally results in a substantial discounting of low-risk or risk-free assets, that is, a significant dollar amount of such assets "disappears" from the balance sheet. The guidelines then establish an 8% minimum ratio of qualified total capital to total risk-weighted assets. At least half of total capital must be "Tier 1" capital, which consists of common equity and common equity equivalents, retained earnings, a limited amount of permanent preferred stock and (for holding companies) a limited amount of trust preferred securities (see the discussion below on these securities), minus intangible assets, net of associated deferred tax liabilities. Up to half of total capital may consist of so-called "Tier 2" capital, comprising a limited amount of subordinated debt, other preferred stock, certain other instruments and a limited amount of the allowance for loan losses.

The second regulatory capital measure, the leverage ratio test, establishes minimum limits on the ratio of Tier 1 capital to total tangible assets, without risk weighting (i.e, discounting) of assets. For top-rated companies, the minimum leverage ratio currently is 4%, but lower-rated or rapidly expanding companies may be required by bank regulators to meet substantially higher minimum leverage ratios. Federal banking law mandates certain actions to be taken by banking regulators for financial institutions that are deemed undercapitalized as measured under any of these regulatory capital guidelines. The law establishes five categories of capitalization for financial institutions ranging from "well-capitalized” (the highest ranking) to "critically undercapitalized" (the lowest ranking). Federal banking law also ties the ability of banking organizations to engage in certain types of non-banking financial activities to such organizations' continuing to qualify for inclusion in one of the two highest-ranking of these capitalization categories, i.e., as "well-capitalized" or "adequately capitalized."

Capital Ratios:The table below sets forth the capital ratios of our holding company and subsidiary banks, Glens Falls National and Saratoga National, as of March 31, 2014:

			Tier 1		Total
	Tier 1		Risk-Based		Risk-Based
	Leverage		Capital		Capital
	Ratio		Ratio		Ratio
Arrow Financial Corporation	9.30	%	14.55	%	15.62	%
Glens Falls National Bank & Trust Co.	8.91	%	14.36	%	15.42	%
Saratoga National Bank & Trust Co.	9.65	%	13.08	%	14.20	%
Regulatory Minimum	4.00		4.00		8.00
FDICIA's "Well-Capitalized" Standard	5.00		6.00		10.00

At March 31, 2014 our holding company and both banks exceeded the minimum capital ratios established under the currently applicable regulatory guidelines, and also qualified as "well-capitalized", the highest category, in the capital classification scheme set by federal bank regulatory agencies (see the further discussion under "Supervision and Regulation" in Part I Item 1.C. of this Report).

Capital Components; Stock Repurchases; Dividends

Stockholders' Equity:Stockholders' equity was $194.5 million at March 31, 2014, an increase of $2.3 million, or 1.2%, from the prior year-end.  The most significant contributions to this increase in stockholders' equity were net income of $5.3 million, equity received from our various stock-based compensation and dividend reinvestment plans of $0.6 million and a $0.2 million unrealized net securities gains, net of tax. These positive factors were offset, in part, by cash dividends of $3.1 million, and purchases of our own common stock of $1.2 million.  See the Consolidated Statement of Changes in Stockholders' Equity on page 6 of this report for all of the changes in stockholders' equity between December 31, 2013 and March 31, 2014.

Trust Preferred Securities Under Dodd-Frank: In each of 2003 and 2004, we issued $10 million of trust preferred securities (TRUPs) in a private placement. Under the Federal Reserve Board's historical approach to regulatory capital, TRUPs typically qualified as Tier 1 capital for bank holding companies such as ours but only in amounts up to 25% of Tier 1 capital, net of goodwill less any associated deferred tax liability. Under the Dodd-Frank Act, this treatment continues to apply, for banking organizations like ours, with

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respect to previously issued TRUPs (i.e., TRUPs issued before the Dodd-Frank Act's grandfathering date), but any trust preferred securities issued by most banking organizations, including ours, on or after the grandfathering date will not qualify as Tier 1 capital under bank regulatory capital guidelines. Thus, our outstanding TRUPs will continue to qualify as Tier 1 capital until maturity or redemption, but any additional TRUPs issued by us would not so qualify.

Stock Repurchase Program: At its regular meeting in November 2013, the Board of Directors approved a 12-month stock repurchase program (the "January 2014 program") authorizing the repurchase, at the discretion of senior management, during calendar year 2014 of up to $5 million of Arrow's common stock in open market or privately negotiated transactions. This program replaced a similar $5 million stock repurchase program which was approved in November 2012 (the "January 2013 program"), under which plan a total of $1.2 million of outstanding stock was repurchased by the Company during 2013. Under the January 2014 program, as under the January 2013 program, management is authorized to effect stock repurchases from time-to-time, to the extent that it believes the Company's stock is reasonably priced and such repurchases appear to be an attractive use of available capital and in the best interests of stockholders. Through March 31, 2014, 28,900 shares having an aggregate purchase price of $719 thousand had been repurchased by the Company under the January 2014 program.

Dividends:Our common stock is traded on NasdaqGS® - AROW. The high and low stock prices for the past five quarters listed below represent actual sales transactions, as reported by NASDAQ. On April 30, 2014, our Board of Directors declared a 2014 second quarter cash dividend of $.25 payable on June 13, 2014. Per share amounts in the following table have been restated for our September 2013 2% stock dividend.

					Cash
	Market Price				Dividends
	Low		High		Declared
2013
First Quarter	$	23.14	$	25.07	$	0.245
Second Quarter	22.95		24.96		0.245
Third Quarter	24.25		27.21		0.245
Fourth Quarter	24.91		28.00		0.250
2014
First Quarter	$	24.50	$	27.48	$	0.250
Second Quarter (dividend payable June 13, 2014)					0.250

	Quarter Ended March 31,
	2014			2013
Cash Dividends Per Share	$	0.250		$	0.245
Diluted Earnings Per Share	0.43			0.42
Dividend Payout Ratio	58.14		%	58.33		%
Total Equity (in thousands)	$	194,491		$	177,803
Shares Issued and Outstanding (in thousands)	12,350			12,251
Book Value Per Share	$	15.75		$	14.51
Intangible Assets (in thousands)	$	25,999		$	26,460
Tangible Book Value Per Share	$	13.64		$	12.35

LIQUIDITY

The objective of effective liquidity management is to ensure that we have the ability to raise cash when we need it at a reasonable cost.  We must be capable of meeting expected and unexpected obligations to our customers at any time.  Given the uncertain nature of customer demands as well as the need to maximize earnings, we must have available reasonably priced sources of funds, both on- and off-balance sheet, that can be accessed quickly in time of need.

Our primary sources of available liquidity are overnight investments in federal funds sold, interest bearing bank balances at the Federal Reserve Bank, and cash flow from investment securities and loans.  Certain investment securities are selected at purchase as available-for-sale based on their marketability and collateral value, as well as their yield and maturity.  Our securities available-for-sale portfolio was $429.2 million at period-end 2014, a decrease of $28.4 million from the year-end 2013 level. Due to the potential for volatility in market values, we are not always able to assume that securities may be sold on short notice at their carrying value, even to provide needed liquidity.

In addition to liquidity from short-term investments, investment securities and loans, we have supplemented available operating liquidity with additional off-balance sheet sources such as federal funds lines of credit and credit lines with the Federal Home Loan Bank of New York ("FHLBNY"). Our federal funds lines of credit are with two correspondent banks totaling $35 million, but we did not draw on these lines during 2014.  

To support our borrowing relationship with the FHLBNY, we have pledged collateral, including mortgage-backed securities and residential mortgage loans. Our unused borrowing capacity at the FHLBNY was approximately $223.6 million at March 31, 2014. In addition we have identified brokered certificates of deposit as an appropriate off-balance sheet source of funding accessible in a relatively short time period. Also, our two bank subsidiaries have each established a borrowing facility with the Federal Reserve Bank

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of Net York, pledging certain consumer loans as collateral for potential "discount window" advances, which we maintain for contingency liquidity purposes. At March 31, 2014, the amount available under this facility was approximately $303.1 million, but there were no advances then outstanding.    

We measure and monitor our basic liquidity as a ratio of liquid assets to total short-term liabilities, both with and without the availability of borrowing arrangements. Based on the level of overnight funds investments, available liquidity from our investment securities portfolio, cash flows from our loan portfolio, our stable core deposit base and our significant borrowing capacity, we believe that our liquidity is sufficient to meet all funding needs that may arise in connection with any reasonably likely events or occurrences. At March 31, 2014, our basic liquidity ratio was 3.5% of total assets, or $77 million, below our minimum ratio as defined in policy of 4%, or $89 million of total assets.

Throughout the recent years of financial instability, our liquidity position remained strong, as depositors and investors in the wholesale funding markets showed no hesitations in placing or maintaining their funds with our banks. The financial markets have been challenging for many financial institutions, and the widely accepted view is that during the recent crisis a lack of liquidity was as great a problem for many troubled institutions as a capital shortfall. As a result, liquidity premiums widened and many banks experienced certain liquidity constraints, including substantially increased pricing to retain deposit balances. Because of Arrow's favorable credit quality and strong balance sheet, Arrow did not experience any significant liquidity constraints from the beginning of the crisis in early 2008 through the date of this Report and was never forced to pay premium rates to obtain retail deposits or other funds from any source.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2014 Compared With

Three Months Ended March 31, 2013

Summary of Earnings Performance

(Dollars in Thousands, Except Per Share Amounts)

	Quarter Ended
	03/31/2014			03/31/2013			Change			% Change
Net Income	$	5,320		$	5,181		$	139		2.7	%
Diluted Earnings Per Share	0.43			0.42			0.01			2.4
Return on Average Assets	0.99		%	1.03		%	(0.04		)%	(3.9	)
Return on Average Equity	11.11		%	11.88		%	(0.77		)%	(6.5	)

We reported earnings (net income) of $5.3 million and diluted earnings per share (EPS) of $.43 for the first quarter of 2014, compared to net income of $5.2 million and EPS of $.42 for the first quarter of 2013.

There were no sales of securities in the 2014 quarter, compared to net gains of $318 thousand, net of tax, in the 2013 quarter.

    The following narrative discusses the quarter-to-quarter changes in net interest income, noninterest income, noninterest expense and income taxes.

Net Interest Income

Summary of Net Interest Income

(Taxable Equivalent Basis, Dollars in Thousands)

	Quarter Ended
	03/31/2014			03/31/2013			Change			% Change
Interest and Dividend Income	$	17,439		$	17,059		$	380		2.2	%
Interest Expense	1,594			2,239			(645		)	(28.8	)
Net Interest Income	15,845			14,820			1,025			6.9
Tax-Equivalent Adjustment	1,173			1,063			110			10.3
Average Earning Assets (1)	2,056,841			1,922,863			133,978			7.0
Average Interest-Bearing Liabilities	1,678,080			1,590,401			87,679			5.5
Yield on Earning Assets (1)	3.44		%	3.60		%	(0.16		)%	(4.4	)
Cost of Interest-Bearing Liabilities	0.39			0.57			(0.18		)	(31.6	)
Net Interest Spread	3.05			3.03			0.02			0.7
Net Interest Margin	3.12			3.13			(0.01		)	(0.3	)

(1) Includes Nonaccrual Loans

Our net interest margin (net interest income on a tax-equivalent basis by average earning assets, annualized) fell by one basis point, from 3.13% to 3.12%, between the first quarter of 2013 and the first quarter of 2014, representing a 0.3% decrease in the margin. (See the discussion under “Use of Non-GAAP Financial Measures,” on page 31, regarding our net interest margin and net interest income, which are commonly used non-GAAP financial measures.) This decrease in the net interest margin reflects a continuing trend impacting most commercial banks. In management's view, despite the recent modest upturn in prevailing longer term interest rates, this persistent trend of margin compression may well continue in upcoming periods, and if rates do begin to move broadly upward, our liabilities generally may reprice more rapidly than our assets. Net interest income for the just completed quarter, on a taxable equivalent basis, increased by

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$1.03 million, or 6.9%, from the first quarter of 2013, as the small decrease in our net interest margin between the periods was more than offset by the positive impact of a 7.0% increase in the level of our average earning assets. The impact of recent interest rate changes on our net interest margin and net interest income are discussed above in this Report under the sections entitled “Deposit Trends,” “Impact of Interest Rate Changes” and “Loan Trends.”     

As discussed previously under the heading "Asset Quality" beginning on page 41, the provision for loan losses for the first quarter of 2014 was $458 thousand and $100 thousand for the 2013 quarter.

Noninterest Income

Summary of Noninterest Income

(Dollars in Thousands)

	Quarter Ended
	03/31/2014		03/31/2013		Change			% Change
Income From Fiduciary Activities	$	1,873	$	1,574	$	299		19.0	%
Fees for Other Services to Customers	2,194		2,282		(88		)	(3.9	)
Insurance Commissions	2,444		2,028		416			20.5
Net Gain on Securities Transactions	—		527		(527		)	(100.0	)
Net Gain on the Sale of Loans	123		607		(484		)	(79.7	)
Other Operating Income	252		156		96			61.5
Total Noninterest Income	$	6,886	$	7,174	$	(288	)	(4.0	)

Total noninterest income in the just completed quarter was $6.9 million, a decrease of $288 thousand, or 4.0%, from total noninterest income of $7.2 million for the first quarter of 2013. We experienced increases in insurance commissions, income from fiduciary activities and other operating income. These net increases were more than offset by the absence of securities gains in the 2014 quarter, a decrease in fees for other services to customers and a decrease in net gains on the sale of loans as we began to taper our sale of loans to the secondary market during the second half of 2013 and the first quarter of 2014.

For the just completed 2014 quarter, insurance commission income rose from $2.0 million for the first quarter of 2013 to $2.4 million for the first quarter of 2014, an increase of $416 thousand, or 20.5%. This increase was primarily attributable to annual contingent commission income received from certain insurance carriers. Income from fiduciary activities increased $299 thousand, or 19.0%, from the comparable 2013 quarter. At quarter-end 2014, the market value of assets under trust administration and investment management amounted to $1.183 billion, an increase of $88.0 million, or 8.0%, from March 31, 2013. The growth was generally attributable to a significant rise in the equity markets between the reporting dates and the net addition of new accounts. A significant portion of our fiduciary fees are based on the dollar amount of assets under administration.

Fees for other services to customers includes service charges on deposit accounts, debit card interchange fees, revenues related to the sale of mutual funds to our customers by third party providers and servicing income on sold loans. Effective October 1, 2011 VISA announced new, reduced debit interchange rates and related modifications to comply with new debit card interchange fee rules promulgated by the Federal Reserve under the Dodd-Frank Act. This reduced rate structure has had, and will continue to have, a slight but noticeable negative impact on our fee income. However, debit card usage by our customers continues to grow which has offset at least in part, the negative effect of reduced debit interchange rates. If this usage continues to grow, it will continue to offset the negative impact of reduced interchange fees. We do not believe that Visa's new limits on interchange fees resulting from Dodd-Frank will have a material adverse impact on our financial condition or results of operations in future periods. However, there is currently a lawsuit challenging the existing fee structure as too high. The Federal Reserve Bank successfully asked the court to permit retention of the current fee structure until the case is settled. The small decrease in quarter-to-quarter income in Fees for Other Services to Customers was primarily attributable to decreased revenues related to the sale of mutual funds to our customers by third party providers.

The increase in other operating income in the first quarter of 2014 versus the first quarter of 2013, was primarily due to losses on the sale of other real estate owned recognized in the 2013 quarter.

Noninterest Expense

Summary of Noninterest Expense

(Dollars in Thousands)

	Quarter Ended
	03/31/2014			03/31/2013			Change			% Change
Salaries and Employee Benefits	$	7,642		$	7,621		$	21		0.3	%
Occupancy Expense of Premises, Net	1,305			1,210			95			7.9
Furniture and Equipment Expense	1,036			1,066			(30		)	(2.8	)
FDIC and FICO Assessments	273			264			9			3.4
Amortization	106			124			(18		)	(14.5	)
Other Operating Expense	3,104			3,126			(22		)	(0.7	)
Total Noninterest Expense	$	13,466		$	13,411		$	55		0.4
Efficiency Ratio	58.77		%	61.90		%	(3.13		)%	(5.1	)

Noninterest expense for the first quarter of 2014 was $13.5 million, an increase of $55 thousand, or 0.4%, from the expense for the first quarter of 2013. For the first quarter of 2014, our efficiency ratio was 58.77%. This ratio, which is a commonly used non-GAAP financial

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measure in the banking industry, is a comparative measure of a financial institution's operating efficiency. The efficiency ratio (a ratio where lower is better) is the ratio of noninterest expense (excluding, under our definition, intangible asset amortization) to (i) net interest income (on a tax-equivalent basis) plus (ii) noninterest income (excluding net securities gains or losses). See the discussion on page 31 of this Report under the heading “Use of Non-GAAP Financial Measures.” The efficiency ratio included by the Federal Reserve Board in its "Peer Holding Company Performance Reports" excludes net securities gains or losses from the denominator (as does our calculation), but unlike our ratio does not exclude intangible asset amortization from the numerator. The favorable change in our efficiency ratio between the periods reflected the fact that our core gross income grew faster than our operating expenses. Our efficiency ratios in recent periods have also compared favorably to the ratios of our peer group, even adjusting for the definitional difference. For the year ended December 31, 2013 (the most recent reporting period for which peer group information is available), the peer group efficiency ratio was 70.54%, and our ratio was 60.24% (not adjusted).

Salaries and employee benefits expense were essentially unchanged in 2014 from the 2013 quarter, representing the offsetting effects of a 3.0% increase in salaries and a 5.6% decrease in benefits. The decrease in our benefit expenses was primarily attributable to lower pension costs.

The increase in occupancy expense was distributed among several categories including maintenance, depreciation, taxes, rental expense and insurance.

The decrease in furniture and equipment expense was primarily attributable to lower equipment depreciation and maintenance expenses.

The category demonstrating the largest increase in other operating expense between the periods was third party computer processing expenses, more than offset by reductions in costs to carry real estate acquired through foreclosure, legal and telecommunications expenses.

Income Taxes

Summary of Income Taxes

(Dollars in Thousands)

	Quarter Ended
	03/31/2014			03/31/2013			Change		% Change
Provision for Income Taxes	$	2,314		$	2,239		$	75	3.3	%
Effective Tax Rate	30.3		%	30.2		%	0.1		0.3

The provisions for federal and state income taxes amounted to $2.3 million and $2.2 million for the respective three-month periods of 2013 and 2012. The effective tax rate was relatively unchanged between the periods.

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In addition to credit risk in our loan portfolio and liquidity risk, discussed on page 44 of this Report, we have market risk in our business activities. Market risk is the possibility that changes in future market rates (interest rates) or prices (fees for products and services) will make our position less valuable. The ongoing monitoring and management of market risk, principally interest rate risk, is an important component of our asset/liability management process, which is governed by policies that are reviewed and approved annually by the Board of Directors. The Board of Directors delegates responsibility for carrying out asset/liability oversight and control to management’s Asset/Liability Committee (“ALCO”). In this capacity ALCO develops guidelines and strategies impacting our asset/liability profile based upon estimated market risk sensitivity, policy limits and overall market interest rate levels and trends. As of the date of this report, we have not made use of derivatives, such as interest rate swaps, in our risk management process.

Interest rate risk is the most significant market risk affecting us, and is more important to us, we believe, than credit risk or liquidity risk. Interest rate risk is the exposure of our net interest income to changes in interest rates. Interest rate risk is directly related to the different maturities and repricing characteristics of interest-bearing assets and liabilities, as well as to the risk of prepayment of loans and early withdrawal of time deposits, and the fact that the speed and magnitude of responses to interest rate changes vary by product.

The ALCO utilizes the results of a detailed and dynamic simulation model to quantify the estimated exposure of net interest income to sustained interest rate changes. While ALCO routinely monitors simulated net interest income sensitivity over a rolling two-year horizon, it also utilizes additional tools to monitor potential longer-term interest rate risk.

Our current simulation model attempts to capture the impact of changing interest rates on the interest income received and interest expense paid on all interest-sensitive assets and liabilities reflected on our consolidated balance sheet. This sensitivity analysis is compared to pre-established ALCO policy limits which specify a maximum tolerance level for net interest income exposure over a one year horizon. Our current sensitivity analysis model examines both a hypothetical upward shift of interest rates (currently, 200 basis points) and a hypothetical downward shift in interest rates (currently, 100 basis points, subject to certain limitations), and assumes no subsequent change in the balance sheet and a repricing of interest-bearing assets and liabilities at their earliest reasonably predictable repricing date. For repricing purposes, we normally assume a parallel and pro-rata shift in rates for both assets and liabilities, over a 12 month period.

We occasionally are forced to make ad hoc adjustments to our model. During recent years, the Federal Reserve's targeted federal funds rate has remained within a range of 0 to .25%. The resulting abnormally low short-term rates have led us to revise our standard model for the decreasing interest rate simulation for short-term liabilities and assets. We applied our usual 100 basis point downward shift in interest rates for liabilities and assets on the long end of the yield curve, but we were limited by an absolute floor of a zero interest rate for the modeling of our short-term liabilities and assets. Consequently, for purposes of determining the effect of a downward shift in rates under our current simulation model, we made no downward shift in interest rates for our short-term liabilities and assets, even if such rates slightly exceed zero at the measurement date. We also always assume that hypothetical interest rate shifts, upward or downward, affect assets and liabilities simultaneously, depending upon the contractual maturities of the particular assets and liabilities in question. In practice, however, shifts in prevailing interest rates typically affect our liability portfolios (primarily deposits) more rapidly than our asset portfolios, irrespective of differences in contractual maturities.

# 47

Applying the simulation model analysis as of March 31, 2014, a 200 basis point increase in all interest rates demonstrated a 4.69% decrease in net interest income over the ensuing 12 month period, and a 100 basis point decrease in long-term interest rates (with no decrease in short-term rates, or adjusted as discussed above) demonstrated a 1.39% decrease in net interest income, when compared with our base projection. These amounts were well within our ALCO policy limits. The preceding sensitivity analysis does not represent a forecast on our part and should not be relied upon as being indicative of expected operating results.

The hypothetical estimates underlying the sensitivity analysis are based upon numerous assumptions including: the nature and timing of changes in interest rates including yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows, and others. While assumptions are developed based upon current economic and local market conditions, we cannot make any assurance as to the predictive nature of these assumptions including how customer preferences or competitor influences might change.

Also, as market conditions vary from those assumed in the sensitivity analysis, actual results may differ due to: prepayment/refinancing levels deviating from those assumed, the varying impact of interest rate changes on caps or floors on adjustable rate assets, the potential effect of changing debt service levels on customers with adjustable rate loans, depositor early withdrawals and product preference changes, unanticipated shifts in the yield curve and other internal/external variables. Furthermore, the sensitivity analysis does not reflect actions that ALCO might take in responding to or anticipating changes in interest rates.

In general, our interest-bearing liabilities will reprice more rapidly in a rising rate environment than our interest-earning assets, resulting in a decrease in net interest income as reported in the simulation analysis, above. However, many of our interest-earning assets have relatively short lives and within a few quarters after the first year results we expect that the positive impact from the repricing of the interest-earning assets will more than make up for the increases in interest expense.

Item 4.

CONTROLS AND PROCEDURES

Senior management, including the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of Arrow's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of March 31, 2014. Based upon that evaluation, senior management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective. Further, there were no changes made in our internal control over financial reporting that occurred during the most recent fiscal quarter that had materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

We are not the subject of any material pending legal proceedings, other than ordinary routine litigation occurring in the normal course of our business. On an ongoing basis, we are the subject of, or a party to, various legal claims against us, by us against other parties, or involving us, which arise in the normal course of our business. The various pending legal claims against us will not, in the opinion of management based upon consultation with counsel, result in any material liability.

Item 1.A.

Risk Factors

We believe that the risk factors identified in our Annual Report on Form 10-K for the year ended December 31, 2013, continue to represent the most significant risks to our future results of operations and financial conditions, without modification or amendment. Please refer to such risk factors listed in Part I, Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

# 48

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

In connection with Arrow's acquisition by merger in February 2011 of Upstate Agency, Inc., an insurance agency specializing in the sale of property and casualty insurance, Arrow issued at closing of the transaction and in post-closing payments to date, to the sole shareholder of Upstate, in exchange for all of his shares of the agency, a total of 151,449 shares, as adjusted for subsequent stock dividends, of Arrow's common stock and approximately $2.93 million in cash. The acquisition agreement also provided for possible post-closing payments of additional shares of Arrow's common stock to the former shareholder of Upstate, contingent upon the financial performance and business results of Upstate as a subsidiary of Glens Falls National over the three-year period following the closing of the acquisition. The final post-closing stock payment to the former Upstate shareholder was completed in March 2014. All shares issued to the Upstate shareholder at the original closing and issuable to him in future post-closing payments were and will be issued without registration under the Securities Act of 1933, as amended, in reliance upon the exemption for such registration set forth in Section 3(a)(11) of the Act and Rule 147 promulgated by the Securities and Exchange Commission thereunder. This exemption was and remains available because at closing the sole shareholder of Upstate was a New York resident and Upstate was a New York corporation having substantially all of its assets and business operations in the State of New York.

Issuer Purchases of Equity Securities

The following table presents information about purchases by Arrow of its common stock during the three months ended March 31, 2014:

First Quarter 2014 Calendar Month	(A) Total Number of Shares Purchased 1	(B) Average Price Paid Per Share 1		(C) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 2	(D) Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs 3
January	11,060	$	25.26	10,000	$	4,748,300
February	23,007	24.90		18,900	4,281,117
March	31,423	26.81		—	4,281,117
Total	65,490	25.88		28,900

¹ Share amounts and average prices listed in columns A and B (total number of shares purchased and the average price paid per share) include, in addition to shares repurchased under the Company’s publicly announced stock repurchase program, shares purchased in open market transactions under the Arrow Financial Corporation Automatic Dividend Reinvestment Plan (DRIP) by the administrator of the DRIP and shares surrendered (or deemed surrendered) to Arrow by holders of options to acquire Arrow common stock in connection with the exercise of such options. In the months indicated, the total number of shares purchased listed in column A included the following numbers of shares purchased through such additional methods: January – DRIP market purchases (1,060 shares); February – DRIP market purchases (2,173 shares), exercise of stock options (1,934 shares); March – DRIP market purchases (16,649 shares), exercise of stock options (14,774 shares) .

² Shares repurchased by the Company under its publicly-announced stock repurchase program (i.e., the $5 million stock repurchase program authorized by the Board of Directors in November 2013 and effective January 1, 2014 (the “2014 Repurchase Program”)) during the quarter.

³ Represents the dollar amount of repurchase authority remaining at each month-end during the quarter under the 2014 Repurchase Program, the Company’s only publicly-announced stock repurchase program in effect at the end of each such month.

Item 3.

Defaults Upon Senior Securities - None

Item 4.

Mine Safety Disclosures - None

Item 5.

Other Information - None

# 49

Item 6.

Exhibits

Exhibit Number	Exhibit
15	Awareness Letter
31.1	Certification of Chief Executive Officer under SEC Rule 13a-14(a)/15d-14(a)
31.2	Certification of Chief Financial Officer under SEC Rule 13a-14(a)/15d-14(a)
32	Certification of Chief Executive Officer under 18 U.S.C. Section 1350 and    Certification of Chief Financial Officer under 18 U.S.C. Section 1350
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

# 50

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

ARROW FINANCIAL CORPORATION

Registrant

May 8, 2014	/s/Thomas J. Murphy
Date	Thomas J. Murphy, President and
	Chief Executive Officer
May 8, 2014	/s/Terry R. Goodemote
Date	Terry R. Goodemote, Executive Vice President,
	Treasurer and Chief Financial Officer
	(Principal Financial Officer and
	Principal Accounting Officer)

# 51

EX-15

Exhibit 15

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Arrow Financial Corporation

Glens Falls, New York

Re: Filing on the March 31, 2014 Form 10-Q for Arrow Financial Corporation

With respect to the registration statements, Forms S-3 (No. 333-187293 and No. 333-175236) and S-8 (No. 333-62719, No. 333-151550, No. 333-188479, and No. 333-188480)of Arrow Financial Corporation and subsidiaries we acknowledge our awareness of the use therein of our report dated May 8, 2014 related to our review of interim financial information.

Pursuant to Rule 436 under the Securities Act of 1933 (the Act), such report is not considered part of a registration statement prepared or certified by an independent registered public accounting firm, or a report prepared or certified by an independent registered public accounting firm within the meaning of Sections 7 and 11 of the Act.

Very truly yours,

/s/ KPMG LLP

Albany, New York

May 8, 2014

EX-31.1

Certification of the Chief Executive Officer Pursuant to

Securities Exchange Act Rules 13a-14 and 15d-14

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Thomas J. Murphy, certify that:

1.I have reviewed the quarterly report on Form 10-Q of Arrow Financial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:May 8, 2014

By:/s/ Thomas J. Murphy

Thomas J. Murphy

Chief Executive Officer

EX-31.2

Certification of the Chief Financial Officer Pursuant to

Securities Exchange Act Rules 13a-14 and 15d-14

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Terry R. Goodemote, certify that:

1.I have reviewed the quarterly report on Form 10-Q of Arrow Financial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:May 8, 2014

By:/s/ Terry R. Goodemote

Terry R. Goodemote

Chief Financial Officer

EX-32

Certification of Chief Executive Officer and Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant To

Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the quarterly report of Arrow Financial Corporation (the "Company") on Form 10-Q for the period ended March 31, 2014, filed with the Securities and Exchange Commission (the "Report"), we, Thomas J. Murphy, Chief Executive Officer of the Company, and Terry R. Goodemote, Chief Financial Officer of the Company, hereby certify, in accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge:

(a)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(b)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 8, 2014

/s/ Thomas J. Murphy

Thomas J. Murphy

Chief Executive Officer

/s/ Terry R. Goodemote

Terry R. Goodemote

Chief Financial Officer

XML

Stock Based Compensation Plan (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding, Beginning of Period, in shares	389,392
Granted, in shares	74,037
Stock Options Exercised, in shares	(19,308)	(23,434)
Forfeited, in shares	0
Outstanding, End of Period, in shares	444,121
Exercisable at Period End, in shares	307,765
Vested and Expected to Vest, in shares	136,356
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding at Beginning of Period, in dollars per share	$ 22.89
Granted, in dollars per share	$ 25.00
Excercised, in dollars per share	$ 24.55
Forfeited, in dollars per share	$ 0.00
Outstanding, End of Period, in dollars per share	$ 23.17
Exercisable at Period End, in dollars per share	$ 22.38
Vested and Expected to Vest, in dollars per share	$ 24.95
Fair Value, in dollars per share	$ 6.04
Dividend Yield	3.97%
Expected Volatility	35.30%
Risk Free Interest Rate	2.19%
Expected Lives, in years	6 years 10 months 5 days

XML

Loans Loans Modified in Trouble Debt Restructurings (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Financing Receivable, Modifications [Line Items]
Number of Loans	1	2
Pre-Modification Outstanding Recorded Investment	$ 2	$ 11
Post-Modification Outstanding Recorded Investment	2	11
Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans	0	0
Pre-Modification Outstanding Recorded Investment	0	0
Post-Modification Outstanding Recorded Investment	0	0
Commercial Construction [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans	0	0
Pre-Modification Outstanding Recorded Investment	0	0
Post-Modification Outstanding Recorded Investment	0	0
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans	0	0
Pre-Modification Outstanding Recorded Investment	0	0
Post-Modification Outstanding Recorded Investment	0	0
Other Consumer [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans	0	0
Pre-Modification Outstanding Recorded Investment	0	0
Post-Modification Outstanding Recorded Investment	0	0
Automobile [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans	1	2
Pre-Modification Outstanding Recorded Investment	2	11
Post-Modification Outstanding Recorded Investment	2	11
Residential [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans	0	0
Pre-Modification Outstanding Recorded Investment	0	0
Post-Modification Outstanding Recorded Investment	$ 0	$ 0

XML

Earnings Per Comon Share (Tables)

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The following table presents a reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings per common share (“EPS”) for periods ended March 31, 2014 and 2013.  All share and per share amounts have been adjusted for the September 2013 2% stock dividend.

Earnings Per Share
	Year-to-Date Period Ended:
	March 31, 2014		March 31, 2013
Earnings Per Share - Basic:
Net Income	$	5,320	$	5,181
Weighted Average Shares - Basic	12,354		12,272
Earnings Per Share - Basic	$	0.43	$	0.42
Earnings Per Share - Diluted:
Net Income	$	5,320	$	5,181
Weighted Average Shares - Basic	12,354		12,272
Dilutive Average Shares Attributable to Stock Options	24		18
Weighted Average Shares - Diluted	12,378		12,290
Earnings Per Share - Diluted	$	0.43	$	0.42
Antidilutive Shares Excluded from the Calculation of Earnings Per Share	—		129

XML

Earnings Per Comon Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Earnings Per Share [Abstract]
Net Income	$ 5,320		$ 5,181
Basic, in shares	12,354	[1]	12,272	[1]
Basic Earnings, in dollars per share	$ 0.43	[1]	$ 0.42	[1]
Dilutive Average Shares Attributable to Stock Options, in shares	24	[1]	18	[2]
Diluted, in shares	12,378	[1]	12,290	[1],[2]
Diluted Earnings, in dollars per share	$ 0.43	[1]	$ 0.42	[1]
Antidilutive Securities Excluded from the Calculation of Earnings Per Share, in shares	0	[1]	129	[2]

[1] Share and Per Share Amounts have been restated for the September 2013 2% stock dividend.

[2] All share and per share amounts have been adjusted for the September 2013 2% stock dividend

XML

Comprehensive Income Changes in Accumulated Other Comprehensive Income By Component (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Accumulated Other Comprehensive Income (Loss), Net of Tax, Beginning of Period	$ (4,373)	[1]	$ (8,462)	[1]
Other comprehensive income, before reclassifications, net of tax	241	[1]	220	[1]
Reclassification from Accumulated Other Comprehensive Income, net of tax	57	[1]	(82)	[1]
Other Comprehensive (Loss) Income	298	[1]	138	[1]
Accumulated Other Comprehensive Income (Loss), Net of Tax, End of Period	(4,075)	[1]	(8,324)	[1]
Unrealized Gains and Losses on Available for Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Accumulated Other Comprehensive Income (Loss), Net of Tax, Beginning of Period	2,374	[1]	5,625	[1]
Other comprehensive income, before reclassifications, net of tax	241	[1]	220	[1]
Reclassification from Accumulated Other Comprehensive Income, net of tax	0	[1]	(318)	[1]
Other Comprehensive (Loss) Income	241	[1]	(98)	[1]
Accumulated Other Comprehensive Income (Loss), Net of Tax, End of Period	2,615	[1]	5,527	[1]
Amortization of Net Retirement Plan Actuarial Loss [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Accumulated Other Comprehensive Income (Loss), Net of Tax, Beginning of Period	(6,697)	[1]	(14,036)	[1]
Other comprehensive income, before reclassifications, net of tax	0	[1]	0	[1]
Reclassification from Accumulated Other Comprehensive Income, net of tax	70	[1]	236	[1]
Other Comprehensive (Loss) Income	70	[1]	236	[1]
Accumulated Other Comprehensive Income (Loss), Net of Tax, End of Period	(6,627)	[1]	(13,800)	[1]
Accretion of Net Retirement Plan Prior Service Credit [Member]
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Accumulated Other Comprehensive Income (Loss), Net of Tax, Beginning of Period	(50)	[1]	(51)	[1]
Other comprehensive income, before reclassifications, net of tax	0	[1]	0	[1]
Reclassification from Accumulated Other Comprehensive Income, net of tax	(13)	[1]	0	[1]
Other Comprehensive (Loss) Income	(13)	[1]	0	[1]
Accumulated Other Comprehensive Income (Loss), Net of Tax, End of Period	$ (63)	[1]	$ (51)	[1]

[1] (1) All amounts are net of tax. Amounts in parentheses indicate debits.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

ACCOUNTING POLICIES

In the opinion of the management of Arrow Financial Corporation (Arrow), the accompanying unaudited consolidated interim financial statements contain all of the adjustments necessary to present fairly the financial position as of March 31, 2014, December 31, 2013 and March 31, 2013; the results of operations for the three-month periods ended March 31, 2014 and 2013; the consolidated statements of comprehensive income for the three-month periods ended March 31, 2014 and 2013; the changes in stockholders' equity for the three-month periods ended March 31, 2014 and 2013; and the cash flows for the three-month periods ended March 31, 2014 and 2013. All such adjustments are of a normal recurring nature. Certain prior period amounts have been reclassified to conform to the current presentation. The preparation of financial statements requires the use of management estimates. The unaudited consolidated interim financial statements should be read in conjunction with the audited annual consolidated financial statements of Arrow for the year ended December 31, 2013, included in Arrow's 2013 Form 10-K.

New Accounting Standards Updates (ASU): During 2014, through the date of this report, the FASB issued eight accounting standards updates, only two of which apply to Arrow.

ASU 2014-01 "Investments-Equity Method and Joint Ventures" allows an entity that invests in affordable housing projects that qualify for low-income housing tax credits to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense. The standard is effective for annual years beginning after December 15, 2014, with earlier adoption allowed. We adopted the proportional amortization method in the first quarter of 2014. The adoption did not have a material impact on our financial condition or results of operations.

ASU 2014-04 "Receivables - Trouble Debt Restructurings by Creditors" provides additional guidance on when an in substance repossession or foreclosure occurs and is effective for annual periods beginning after December 15, 2014. We are evaluating the impact of adopting this standard, and we do not expect that it will have a material impact on our financial condition or results of operations.

XML

Fair Value of Financial Instruments Fair Value - Recurring and Nonrecurring (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	$ 429,230	$ 457,606	$ 478,775
Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	429,230	457,606	478,775
Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Quoted Prices In Active Markets for Indentical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	0	0	0
Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	429,230	457,606	478,775
Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	0	0	0
Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Real Estate and Repossessed Assets, Net	198	144	1,194
Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis [Member] | Quoted Prices In Active Markets for Indentical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Real Estate and Repossessed Assets, Net	0	0	0
Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Real Estate and Repossessed Assets, Net	0	0	0
Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Real Estate and Repossessed Assets, Net	198	144	1,194
Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis [Member] | Total Gains (Losses) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Real Estate and Repossessed Assets, Net	(52)	(79)	(56)
U.S. Agency Obligations [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	121,220	136,475	132,153
U.S. Agency Obligations [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Quoted Prices In Active Markets for Indentical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	0	0	0
U.S. Agency Obligations [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	121,220	136,475	132,153
U.S. Agency Obligations [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	0	0	0
State and Municipal Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	125,410	127,389	104,469
State and Municipal Obligations [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	125,410	127,389	104,469
State and Municipal Obligations [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Quoted Prices In Active Markets for Indentical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	0	0	0
State and Municipal Obligations [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	125,410	127,389	104,469
State and Municipal Obligations [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	0	0	0
Mortgage-Backed Securities - Residential [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	164,541	175,778	228,323
Mortgage-Backed Securities - Residential [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Quoted Prices In Active Markets for Indentical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	0	0	0
Mortgage-Backed Securities - Residential [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	164,541	175,778	228,323
Mortgage-Backed Securities - Residential [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	0	0	0
Corporate and Other Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	16,839	16,798	12,691
Corporate and Other Debt Securities [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	16,839	16,798	12,691
Corporate and Other Debt Securities [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Quoted Prices In Active Markets for Indentical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	0	0	0
Corporate and Other Debt Securities [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	16,839	16,798	12,691
Corporate and Other Debt Securities [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	0	0	0
Mutual Funds and Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	1,220	1,166	1,139
Mutual Funds and Equity Securities [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	1,220	1,166	1,139
Mutual Funds and Equity Securities [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Quoted Prices In Active Markets for Indentical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	0	0	0
Mutual Funds and Equity Securities [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	1,220	1,166	1,139
Mutual Funds and Equity Securities [Member] | Fair Value of Assets and Liabilities Measured on a Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale	$ 0	$ 0	$ 0

XML

Loans Loan Categories and Past Due Loans(Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due 30 - 59 Days	$ 6,718	$ 4,303	$ 5,272
Loans Past Due 60 - 89 Days	1,782	4,388	2,064
Loans Past Due 90 or more Days	4,208	5,422	3,416
Total Loans Past Due	12,708	14,113	10,752
Current Loans	1,297,715	1,252,359	1,154,007
Total Loans	1,310,423	1,266,472	1,164,759
Loans 90 Days or More Past Due and Still Accruing Interest	347	652	259
Nonaccrual Loans	6,284	6,479	5,218
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due 30 - 59 Days	597	304	428
Loans Past Due 60 - 89 Days	579	601	421
Loans Past Due 90 or more Days	29	177	130
Total Loans Past Due	1,205	1,082	979
Current Loans	88,671	86,811	88,188
Total Loans	89,876	87,893	89,167
Loans 90 Days or More Past Due and Still Accruing Interest	0	28	0
Nonaccrual Loans	182	352	253
Commercial Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due 30 - 59 Days	0	0	0
Loans Past Due 60 - 89 Days	0	0	0
Loans Past Due 90 or more Days	0	0	0
Total Loans Past Due	0	0	0
Current Loans	28,026	27,815	27,380
Total Loans	28,026	27,815	27,380
Loans 90 Days or More Past Due and Still Accruing Interest	0	0	0
Nonaccrual Loans	0	0	0
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due 30 - 59 Days	1,381	200	1,351
Loans Past Due 60 - 89 Days	237	1,200	200
Loans Past Due 90 or more Days	1,785	2,034	1,886
Total Loans Past Due	3,403	3,434	3,437
Current Loans	305,438	284,685	251,805
Total Loans	308,841	288,119	255,242
Loans 90 Days or More Past Due and Still Accruing Interest	0	0	0
Nonaccrual Loans	2,042	2,048	1,953
Other Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due 30 - 59 Days	73	37	26
Loans Past Due 60 - 89 Days	16	19	10
Loans Past Due 90 or more Days	0	0	0
Total Loans Past Due	89	56	36
Current Loans	7,694	7,593	6,995
Total Loans	7,783	7,649	7,031
Loans 90 Days or More Past Due and Still Accruing Interest	0	0	0
Nonaccrual Loans	1	0	4
Automobile [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due 30 - 59 Days	2,641	3,233	1,986
Loans Past Due 60 - 89 Days	512	1,041	375
Loans Past Due 90 or more Days	150	98	98
Total Loans Past Due	3,303	4,372	2,459
Current Loans	397,318	389,832	351,542
Total Loans	400,621	394,204	354,001
Loans 90 Days or More Past Due and Still Accruing Interest	0	0	0
Nonaccrual Loans	372	219	334
Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans Past Due 30 - 59 Days	2,026	529	1,481
Loans Past Due 60 - 89 Days	438	1,527	1,058
Loans Past Due 90 or more Days	2,244	3,113	1,302
Total Loans Past Due	4,708	5,169	3,841
Current Loans	470,568	455,623	428,097
Total Loans	475,276	460,792	431,938
Loans 90 Days or More Past Due and Still Accruing Interest	347	624	259
Nonaccrual Loans	$ 3,687	$ 3,860	$ 2,674

XML

Investment Securities Held to Maturity (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Schedule of Held-to-maturity Securities [Line Items]
Held-to-Maturity	$ 317,632	$ 299,261	$ 251,456
Held-to-Maturity Securities, at Fair Value	322,335	302,305	259,562
Gross Unrealized Gains	5,316	4,786	8,140
Gross Unrealized Losses	613	1,742	34
Held-To-Maturity Securities, Pledged as Collateral	316,632	298,261	250,456
Maturities of Debt Securities at Amortized Cost
Within One Year	31,895
From 1 - 5 Years	122,675
From 5 - 10 Years	159,073
Over 10 Years	3,989
Maturities of Debt Securities, at Fair Value
Within One Year	31,941
From 1 - 5 Years	124,679
From 5 - 10 Years	161,622
Over 10 Years	4,093
Securities in a Continuous Loss Position, at Fair Value
Less than 12 Months	62,745	108,972	8,794
12 Months or Longer	5,112	5,111	173
Total	67,857	114,083	8,967
Number of Securities in a Continuous Loss Position, in number of securities	103	137	33
Unrealized Losses on Securities in a Continuous Loss Position
Less than 12 Months	572	1,683	34
12 Months or Longer	41	59	0
Total	613	1,742	34
State and Municipal Obligations [Member]
Schedule of Held-to-maturity Securities [Line Items]
Held-to-Maturity	190,847	198,206	198,858
Held-to-Maturity Securities, at Fair Value	195,524	202,390	206,141
Gross Unrealized Gains	5,042	4,762	7,317
Gross Unrealized Losses	365	578	34
Maturities of Debt Securities at Amortized Cost
Within One Year	31,895
From 1 - 5 Years	83,077
From 5 - 10 Years	72,886
Over 10 Years	2,989
Maturities of Debt Securities, at Fair Value
Within One Year	31,941
From 1 - 5 Years	85,023
From 5 - 10 Years	75,467
Over 10 Years	3,093
Securities in a Continuous Loss Position, at Fair Value
Less than 12 Months	19,696	23,633	8,794
12 Months or Longer	5,112	5,111	173
Total	24,808	28,744	8,967
Number of Securities in a Continuous Loss Position, in number of securities	86	101	33
Unrealized Losses on Securities in a Continuous Loss Position
Less than 12 Months	324	519	34
12 Months or Longer	41	59	0
Total	365	578	34
Mortgage-Backed Securities - Residential [Member]
Schedule of Held-to-maturity Securities [Line Items]
Held-to-Maturity	125,785	100,055	51,598
Held-to-Maturity Securities, at Fair Value	125,811	98,915	52,421
Gross Unrealized Gains	274	24	823
Gross Unrealized Losses	248	1,164	0
Maturities of Debt Securities at Amortized Cost
Within One Year	0
From 1 - 5 Years	39,598
From 5 - 10 Years	86,187
Over 10 Years	0
Maturities of Debt Securities, at Fair Value
Within One Year	0
From 1 - 5 Years	39,656
From 5 - 10 Years	86,155
Over 10 Years	0
Securities in a Continuous Loss Position, at Fair Value
Less than 12 Months	43,049	85,339	0
12 Months or Longer	0	0	0
Total	43,049	85,339	0
Number of Securities in a Continuous Loss Position, in number of securities	17	36	0
Unrealized Losses on Securities in a Continuous Loss Position
Less than 12 Months	248	1,164	0
12 Months or Longer	0	0	0
Total	248	1,164	0
Mortgage-Backed Securities - Residential [Member] | U.S. Government Agency Obligations [Member]
Schedule of Held-to-maturity Securities [Line Items]
Held-to-Maturity	4,800	4,900
Held-to-Maturity Securities, at Fair Value	4,800	4,700
Mortgage-Backed Securities - Residential [Member] | US Government-sponsored Enterprises Debt Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Held-to-Maturity	121,000	95,200	51,600
Held-to-Maturity Securities, at Fair Value	121,000	94,200	52,400
Corporate and Other Debt Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Held-to-Maturity	1,000	1,000	1,000
Held-to-Maturity Securities, at Fair Value	1,000	1,000	1,000
Gross Unrealized Gains	0	0	0
Gross Unrealized Losses	0	0	0
Maturities of Debt Securities at Amortized Cost
Within One Year	0
From 1 - 5 Years	0
From 5 - 10 Years	0
Over 10 Years	1,000
Maturities of Debt Securities, at Fair Value
Within One Year	0
From 1 - 5 Years	0
From 5 - 10 Years	0
Over 10 Years	1,000
Securities in a Continuous Loss Position, at Fair Value
Less than 12 Months	0	0	0
12 Months or Longer	0	0	0
Total	0	0	0
Number of Securities in a Continuous Loss Position, in number of securities	0	0	0
Unrealized Losses on Securities in a Continuous Loss Position
Less than 12 Months	0	0	0
12 Months or Longer	0	0	0
Total	$ 0	$ 0	$ 0

XML

Fair Value of Financial Instruments Fair Value by Balance Sheet Grouping (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents	$ 76,050	$ 49,980	$ 137,174	$ 48,832
Available-for-Sale	429,230	457,606	478,775
Held-to-Maturity	317,632	299,261	251,456
Held-to-Maturity Securities, at Fair Value	322,335	302,305	259,562
Federal Home Loan Bank and Federal Reserve Bank Stock	3,896	6,281	4,493
Net Loans	1,295,787	1,252,038	1,150,156
Deposits	1,948,019	1,842,330	1,851,206
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase	13,787	11,777	12,166
Federal Home Loan Bank Term Advances	20,000	20,000	30,000
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts	20,000	20,000	20,000
Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents	76,050	49,980	137,174
Available-for-Sale	429,230	457,606	478,775
Held-to-Maturity	317,632	299,261	251,456
Federal Home Loan Bank and Federal Reserve Bank Stock	3,896	6,281	4,493
Net Loans	1,295,787	1,252,038	1,150,156
Accrued Interest Receivable	6,808	5,745	6,481
Deposits	1,948,019	1,842,330	1,851,206
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase	13,787	11,777	12,166
Federal Home Loan Bank Term Advances	20,000	73,000	30,000
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts	20,000	20,000	20,000
Accrued Interest Payable	405	439	523
Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	76,050	49,980	137,174
Available-for-Sale	429,230	457,606	478,775
Held-to-Maturity Securities, at Fair Value	322,335	302,305	259,562
Federal Home Loan Bank and Federal Reserve Bank Stock, Fair Value Disclosure	3,896	6,281	4,493
Net Loans, Fair Value Disclosure	1,306,043	1,266,020	1,167,063
Accrued Interest Receivable, Fair Value Disclosure	6,808	5,745	6,481
Deposits, Fair Value Disclosure	1,944,116	1,839,613	1,850,614
Federal Funds Purchased and Securities Sold under Agreements to Repurchase, Fair Value Disclosure	13,787	11,777	12,166
Federal Home Loan Bank Term Advances, Fair Value Disclosure	20,519	74,629	31,263
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts, Fair Value Disclosure	20,000	20,000	20,000
Accrued Interest Payable, Fair Value Disclosure	405	439	523
Quoted Prices In Active Markets for Indentical Assets (Level 1) [Member] | Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	76,050	49,980	137,174
Available-for-Sale	0	0	0
Held-to-Maturity Securities, at Fair Value	0	0	0
Federal Home Loan Bank and Federal Reserve Bank Stock, Fair Value Disclosure	3,896	6,281	4,493
Net Loans, Fair Value Disclosure	0	0	0
Accrued Interest Receivable, Fair Value Disclosure	6,808	5,745	6,481
Deposits, Fair Value Disclosure	1,709,784	1,595,103	1,575,954
Federal Funds Purchased and Securities Sold under Agreements to Repurchase, Fair Value Disclosure	13,787	11,777	12,166
Federal Home Loan Bank Term Advances, Fair Value Disclosure	0	53,000	0
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts, Fair Value Disclosure	0	0	0
Accrued Interest Payable, Fair Value Disclosure	405	439	523
Significant Other Observable Inputs (Level 2) [Member] | Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	0	0	0
Available-for-Sale	429,230	457,606	478,775
Held-to-Maturity Securities, at Fair Value	322,335	302,305	259,562
Federal Home Loan Bank and Federal Reserve Bank Stock, Fair Value Disclosure	0	0	0
Net Loans, Fair Value Disclosure	0	0	0
Accrued Interest Receivable, Fair Value Disclosure	0	0	0
Deposits, Fair Value Disclosure	234,332	244,510	274,660
Federal Funds Purchased and Securities Sold under Agreements to Repurchase, Fair Value Disclosure	0	0	0
Federal Home Loan Bank Term Advances, Fair Value Disclosure	20,519	21,629	31,263
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts, Fair Value Disclosure	20,000	20,000	20,000
Accrued Interest Payable, Fair Value Disclosure	0	0	0
Significant Unobservable Inputs (Level 3) [Member] | Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents, Fair Value Disclosure	0	0	0
Available-for-Sale	0	0	0
Held-to-Maturity Securities, at Fair Value	0	0	0
Federal Home Loan Bank and Federal Reserve Bank Stock, Fair Value Disclosure	0	0	0
Net Loans, Fair Value Disclosure	1,306,043	1,266,020	1,167,063
Accrued Interest Receivable, Fair Value Disclosure	0	0	0
Deposits, Fair Value Disclosure	0	0	0
Federal Funds Purchased and Securities Sold under Agreements to Repurchase, Fair Value Disclosure	0	0	0
Federal Home Loan Bank Term Advances, Fair Value Disclosure	0	0	0
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts, Fair Value Disclosure	0	0	0
Accrued Interest Payable, Fair Value Disclosure	$ 0	$ 0	$ 0

XML

Loans Allowance for Loan Losses (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for Loan Losses, Beginning Balance	$ 14,434	$ 15,298
Charge-offs	(336)	(890)
Recoveries	80	95
Provision	458	100
Allowance for Loan Losses, Ending Balance	14,636	14,603
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Allowance for loan losses - Loans Individually Evaluated for Impairment	0	0	0
Allowance for loan losses - Loans Collectively Evaluated for Impairment	14,636	14,603	14,434
Ending Loan Balance - Individually Evaluated for Impairment	4,081	2,809	4,488
Ending Loan Balance - Collectively Evaluated for Impairment	1,306,342	1,161,950	1,261,984
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for Loan Losses, Beginning Balance	1,886	2,344
Charge-offs	(123)	(773)
Recoveries	19	4
Provision	15	44
Allowance for Loan Losses, Ending Balance	1,797	1,619
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Allowance for loan losses - Loans Individually Evaluated for Impairment	0	0	0
Allowance for loan losses - Loans Collectively Evaluated for Impairment	1,797	1,619	1,886
Ending Loan Balance - Individually Evaluated for Impairment	214	37	221
Ending Loan Balance - Collectively Evaluated for Impairment	89,662	89,130	87,672
Commercial Construction [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for Loan Losses, Beginning Balance	417	601
Charge-offs	0	0
Recoveries	0	0
Provision	3	11
Allowance for Loan Losses, Ending Balance	420	612
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Allowance for loan losses - Loans Individually Evaluated for Impairment	0	0	0
Allowance for loan losses - Loans Collectively Evaluated for Impairment	420	612	417
Ending Loan Balance - Individually Evaluated for Impairment	0	0	0
Ending Loan Balance - Collectively Evaluated for Impairment	28,026	27,380	27,815
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for Loan Losses, Beginning Balance	3,545	3,050
Charge-offs	0	(11)
Recoveries	0	0
Provision	233	340
Allowance for Loan Losses, Ending Balance	3,778	3,379
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Allowance for loan losses - Loans Individually Evaluated for Impairment	0	0	0
Allowance for loan losses - Loans Collectively Evaluated for Impairment	3,778	3,379	3,545
Ending Loan Balance - Individually Evaluated for Impairment	1,810	1,505	1,785
Ending Loan Balance - Collectively Evaluated for Impairment	307,031	253,737	286,334
Other Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for Loan Losses, Beginning Balance	272	304
Charge-offs	(14)	(8)
Recoveries	0	0
Provision	22	12
Allowance for Loan Losses, Ending Balance	280	308
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Allowance for loan losses - Loans Individually Evaluated for Impairment	0	0	0
Allowance for loan losses - Loans Collectively Evaluated for Impairment	280	308	272
Ending Loan Balance - Individually Evaluated for Impairment	0	0	0
Ending Loan Balance - Collectively Evaluated for Impairment	7,783	7,031	7,649
Automobile [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for Loan Losses, Beginning Balance	4,206	4,536
Charge-offs	(183)	(98)
Recoveries	61	91
Provision	222	(235)
Allowance for Loan Losses, Ending Balance	4,306	4,294
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Allowance for loan losses - Loans Individually Evaluated for Impairment	0	0	0
Allowance for loan losses - Loans Collectively Evaluated for Impairment	4,306	4,294	4,206
Ending Loan Balance - Individually Evaluated for Impairment	144	182	173
Ending Loan Balance - Collectively Evaluated for Impairment	400,477	353,819	394,031
Residential [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for Loan Losses, Beginning Balance	3,026	3,405
Charge-offs	(16)	0
Recoveries	0	0
Provision	67	(13)
Allowance for Loan Losses, Ending Balance	3,077	3,392
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Allowance for loan losses - Loans Individually Evaluated for Impairment	0	0	0
Allowance for loan losses - Loans Collectively Evaluated for Impairment	3,077	3,392	3,026
Ending Loan Balance - Individually Evaluated for Impairment	1,913	1,085	2,309
Ending Loan Balance - Collectively Evaluated for Impairment	473,363	430,853	458,483
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for Loan Losses, Beginning Balance	1,082	1,058
Charge-offs	0	0
Recoveries	0	0
Provision	(104)	(59)
Allowance for Loan Losses, Ending Balance	978	999
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Allowance for loan losses - Loans Individually Evaluated for Impairment	0	0	0
Allowance for loan losses - Loans Collectively Evaluated for Impairment	978	999	1,082
Ending Loan Balance - Individually Evaluated for Impairment	0	0	0
Ending Loan Balance - Collectively Evaluated for Impairment	$ 0	$ 0	$ 0

XML

Loans Credit Quality Indicators (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Satisfactory [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	$ 397,821	$ 375,393	$ 342,852
Satisfactory [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	82,263	79,966	82,063
Satisfactory [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	28,026	27,815	26,180
Satisfactory [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	287,532	267,612	234,609
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	1,574	838	1,568
Special Mention [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	960	204	183
Special Mention [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	0	0	0
Special Mention [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	614	634	1,385
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	27,348	27,596	27,369
Substandard [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	6,653	7,723	6,921
Substandard [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	0	0	1,200
Substandard [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	20,695	19,873	19,248
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	0	0	0
Doubtful [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	0	0	0
Doubtful [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	0	0	0
Doubtful [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	0	0	0
Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	879,273	857,942	789,698
Performing [Member] | Other Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	7,782	7,649	7,027
Performing [Member] | Automobile [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	400,249	393,985	353,667
Performing [Member] | Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	471,242	456,308	429,004
Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	4,407	4,703	3,272
Nonperforming [Member] | Other Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	1	0	4
Nonperforming [Member] | Automobile [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	372	219	334
Nonperforming [Member] | Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Net	$ 4,034	$ 4,484	$ 2,934

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Cash Flows from Operating Activities:
Net Income	$ 5,320		$ 5,181
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Provision for Loan Losses	458		100
Depreciation and Amortization	1,965		2,373
Allocation of ESOP Stock	204		190
Gains on the Sale of Securities Available-for-Sale	0		(527)
Loans Originated and Held-for-Sale	(4,592)		(18,842)
Proceeds from the Sale of Loans Held-for-Sale	4,277		21,385
Net Gains on the Sale of Loans	(123)		(607)
Net Losses on the Sale of Premises and Equipment, Other Real Estate Owned and Repossessed Assets	3		105
Contributions to Retirement Benefits Plans	(261)		(191)
Deferred Income Tax (Benefit) Expense	(45)		358
Shares Issued Under the Directors' Stock Plan	0		10
Stock-Based Compensation Expense	90		97
Net Increase in Other Assets	(1,025)		(991)
Net Increase in Other Liabilities	1,274		1,006
Net Cash Provided By Operating Activities	7,545		9,647
Cash Flows from Investing Activities:
Proceeds from the Sale of Securities Available-for-Sale	0		16,261
Proceeds from the Maturities and Calls of Securities Available-for-Sale	44,907		22,846
Purchases of Securities Available-for-Sale	(16,905)		(39,928)
Proceeds from the Maturities and Calls of Securities Held-to-Maturity	16,561		6,815
Purchases of Securities Held-to-Maturity	(35,328)		(18,930)
Net (Increase) Decrease in Loans	(44,253)		4,247
Proceeds from the Sales of Premises and Equipment, Other Real Estate Owned and Repossessed Assets	289		341
Purchase of Premises and Equipment	(89)		(991)
Cash Paid for Subsidiaries, Net	(75)		(75)
Net Decrease in Other Investments	2,385		1,299
Net Cash Used In Investing Activities	(32,508)		(8,115)
Cash Flows from Financing Activities:
Net Increase in Deposits	105,689		120,051
Net Decrease in Short-Term Borrowings	(50,990)		(29,512)
Purchase of Treasury Stock	(1,165)		(1,328)
Stock Options Exercised, Net	474		490
Shares Issued Under the Employee Stock Purchase Plan	105		110
Tax Benefit from Exercise of Stock Options	5		8
Cash Dividends Paid	(3,085)	[1]	(3,009)	[1]
Net Cash Provided By Financing Activities	51,033		86,810
Net Increase in Cash and Cash Equivalents	26,070		88,342
Cash and Cash Equivalents at Beginning of Period	49,980		48,832
Cash and Cash Equivalents at End of Period	76,050		137,174
Supplemental Disclosures to Statements of Cash Flow Information:
Interest on Deposits and Borrowings	1,628		2,299
Income Taxes	335		511
Non-cash Investing and Financing Activity:
Transfer of Loans to Other Real Estate Owned and Repossessed Assets	484		604
Acquisition of Subsidiaries	$ 91		$ 91

[1] Cash dividends paid per share have been adjusted for the September 2013 2% stock dividend.

XML

Loans Impaired Loans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Recorded Investment [Abstract]
With No Related Allowance	$ 4,081	$ 2,809	$ 4,488
With a Related Allowance	0	0	0
Unpaid Principal Balance [Abstract]
With No Related Allowance	4,081	2,809	4,488
With a Related Allowance	0	0	0
Average Recorded Balance [Abstract]
With No Related Allowance	4,286	3,339
With a Related Allowance	0	694
Interest Income Recognized [Abstract]
With No Related Allowance	16	7
With a Related Allowance	0	72
Cash Basis Income [Abstract]
With No Related Allowance	0	0
With a Related Allowance	0	72
Commercial [Member]
Recorded Investment [Abstract]
With No Related Allowance	214	37	221
With a Related Allowance	0	0	0
Unpaid Principal Balance [Abstract]
With No Related Allowance	214	37	221
With a Related Allowance	0	0	0
Average Recorded Balance [Abstract]
With No Related Allowance	218	41
With a Related Allowance	0	694
Interest Income Recognized [Abstract]
With No Related Allowance	3	1
With a Related Allowance	0	72
Cash Basis Income [Abstract]
With No Related Allowance	0	0
With a Related Allowance	0	72
Commercial Construction [Member]
Recorded Investment [Abstract]
With No Related Allowance	0	0	0
With a Related Allowance	0	0	0
Unpaid Principal Balance [Abstract]
With No Related Allowance	0	0	0
With a Related Allowance	0	0	0
Average Recorded Balance [Abstract]
With No Related Allowance	0	0
With a Related Allowance	0	0
Interest Income Recognized [Abstract]
With No Related Allowance	0	0
With a Related Allowance	0	0
Cash Basis Income [Abstract]
With No Related Allowance	0	0
With a Related Allowance	0	0
Commercial Real Estate [Member]
Recorded Investment [Abstract]
With No Related Allowance	1,810	1,505	1,785
With a Related Allowance	0	0	0
Unpaid Principal Balance [Abstract]
With No Related Allowance	1,810	1,505	1,785
With a Related Allowance	0	0	0
Average Recorded Balance [Abstract]
With No Related Allowance	1,798	2,017
With a Related Allowance	0	0
Interest Income Recognized [Abstract]
With No Related Allowance	10	0
With a Related Allowance	0	0
Cash Basis Income [Abstract]
With No Related Allowance	0	0
With a Related Allowance	0	0
Other Consumer [Member]
Recorded Investment [Abstract]
With No Related Allowance	0	0	0
With a Related Allowance	0	0	0
Unpaid Principal Balance [Abstract]
With No Related Allowance	0	0	0
With a Related Allowance	0	0	0
Average Recorded Balance [Abstract]
With No Related Allowance	0	0
With a Related Allowance	0	0
Interest Income Recognized [Abstract]
With No Related Allowance	0	0
With a Related Allowance	0	0
Cash Basis Income [Abstract]
With No Related Allowance	0	0
With a Related Allowance	0	0
Automobile [Member]
Recorded Investment [Abstract]
With No Related Allowance	144	182	173
With a Related Allowance	0	0	0
Unpaid Principal Balance [Abstract]
With No Related Allowance	144	182	173
With a Related Allowance	0	0	0
Average Recorded Balance [Abstract]
With No Related Allowance	159	193
With a Related Allowance	0	0
Interest Income Recognized [Abstract]
With No Related Allowance	2	2
With a Related Allowance	0	0
Cash Basis Income [Abstract]
With No Related Allowance	0	0
With a Related Allowance	0	0
Residential [Member]
Recorded Investment [Abstract]
With No Related Allowance	1,913	1,085	2,309
With a Related Allowance	0	0	0
Unpaid Principal Balance [Abstract]
With No Related Allowance	1,913	1,085	2,309
With a Related Allowance	0	0	0
Average Recorded Balance [Abstract]
With No Related Allowance	2,111	1,088
With a Related Allowance	0	0
Interest Income Recognized [Abstract]
With No Related Allowance	1	4
With a Related Allowance	0	0
Cash Basis Income [Abstract]
With No Related Allowance	0	0
With a Related Allowance	$ 0	$ 0

XML

Stock-Based Compensation Expense (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-Based Compensation Expense	$ 90	$ 97

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014		Dec. 31, 2013		Mar. 31, 2013
ASSETS
Cash and Due From Banks	$ 40,056		$ 37,275		$ 23,943
Interest-Bearing Deposits at Banks	35,994		12,705		113,231
Investment Securities:
Available-for-Sale	429,230		457,606		478,775
Held-to-Maturity	317,632		299,261		251,456
Federal Home Loan Bank and Federal Reserve Bank Stock	3,896		6,281		4,493
Loans	1,310,423		1,266,472		1,164,759
Allowance for Loan Losses	(14,636)		(14,434)		(14,603)
Net Loans	1,295,787		1,252,038		1,150,156
Premises and Equipment, Net	28,717		29,154		29,363
Goodwill	22,003		22,003		22,003
Other Intangible Assets, Net	3,996		4,140		4,457
Other Assets	44,270		43,235		38,085
Total Assets	2,221,581		2,163,698		2,115,962
LIABILITIES
Noninterest-Bearing Deposits	277,086		278,958		254,308
NOW Accounts	908,028		817,366		845,531
Savings Deposits	524,670		498,779		476,115
Time Deposits of $100,000 or More	74,127		78,928		89,797
Other Time Deposits	164,108		168,299		185,455
Total Deposits	1,948,019		1,842,330		1,851,206
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase	13,787		11,777		12,166
Federal Home Loan Bank Overnight Advances	0		53,000		0
Federal Home Loan Bank Term Advances	20,000		20,000		30,000
Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts	20,000		20,000		20,000
Other Liabilities	25,284		24,437		24,787
Total Liabilities	2,027,090		1,971,544		1,938,159
STOCKHOLDERS' EQUITY
Preferred Stock	0		0		0
Common Stock	16,744		16,744		16,416
Additional Paid-in Capital	229,842		229,290		219,178
Retained Earnings	29,692		27,457		28,423
Unallocated ESOP Shares	(1,650)		(1,800)		(2,000)
Accumulated Other Comprehensive Loss	(4,075)	[1]	(4,373)	[1]	(8,324)	[1]
Treasury Stock, at Cost	(76,062)		(75,164)		(75,890)
Total Stockholders' Equity	194,491		192,154		177,803
Total Liabilities and Stockholders' Equity	$ 2,221,581		$ 2,163,698		$ 2,115,962

[1] (1) All amounts are net of tax. Amounts in parentheses indicate debits.

XML

Consolidated Statements of Stockholders' Equity (USD $) In Thousands		Total		Common Stock	Additional Paid-In Capital	Retained Earnings	Unallocated ESOP Shares	Accumulated Other Comprehensive Income (Loss)	Treasury Stock
Stockholders' Equity, Beginning Balance at Dec. 31, 2012		$ 175,825		$ 16,416	$ 218,650	$ 26,251	$ (2,150)	$ (8,462)	$ (74,880)
Net Income		5,181		0	0	5,181	0	0	0
Other Comprehensive (Loss) Income		138	[1]	0	0	0	0	138	0
Cash Dividends Paid	[2]	(3,009)		0	0	(3,009)	0	0	0
Stock Options Exercised, Net		490		0	259	0	0	0	231
Shares Issued Under the Directors' Stock Plan		10		0	6	0	0	0	4
Shares Issued Under the Employee Stock Purchase Plan		110		0	64	0	0	0	46
Stock-Based Compensation Expense		97		0	97	0	0	0	0
Tax Benefit for Disposition of Stock Options		8		0	8	0	0	0	0
Purchases of Treasury Stock		(1,328)		0	0	0	0	0	(1,328)
Acquisition of Subsidiaries		91		0	54	0	0	0	37
Allocation of ESOP Stock		190		0	40	0	150	0	0
Stockholders' Equity, Ending Balance at Mar. 31, 2013		177,803		16,416	219,178	28,423	(2,000)	(8,324)	(75,890)
Stockholders' Equity, Beginning Balance at Dec. 31, 2013		192,154		16,744	229,290	27,457	(1,800)	(4,373)	(75,164)
Net Income		5,320		0	0	5,320	0	0	0
Other Comprehensive (Loss) Income		298	[1]	0	0	0	0	298	0
Cash Dividends Paid	[2]	(3,085)		0	0	(3,085)	0	0	0
Stock Options Exercised, Net		474		0	284	0	0	0	190
Shares Issued Under the Directors' Stock Plan		0
Shares Issued Under the Employee Stock Purchase Plan		105		0	63	0	0	0	42
Stock-Based Compensation Expense		90		0	90	0	0	0	0
Tax Benefit for Disposition of Stock Options		5		0	5	0	0	0	0
Purchases of Treasury Stock		(1,165)		0	0	0	0	0	(1,165)
Acquisition of Subsidiaries		91		0	56	0	0	0	35
Allocation of ESOP Stock		204		0	54	0	150	0	0
Stockholders' Equity, Ending Balance at Mar. 31, 2014		$ 194,491		$ 16,744	$ 229,842	$ 29,692	$ (1,650)	$ (4,075)	$ (76,062)

[1] (1) All amounts are net of tax. Amounts in parentheses indicate debits.

[2] Cash dividends paid per share have been adjusted for the September 2013 2% stock dividend.

XML

Guarantees (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Commitments to Extend Credit [Member]
Loan Commitments and Letters of Credit [Line Items]
Notional Amount	$ 235,549	$ 237,940	$ 215,498
Fair Value	0	0	0
Standby Letters of Credit [Member]
Loan Commitments and Letters of Credit [Line Items]
Notional Amount	3,333	3,345	3,562
Fair Value	$ 56	$ 65	$ 53

XML

Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2014

Comprehensive Income [Abstract]

Schedule of Comprehensive Income (Loss) [Table Text Block]

The following table presents the components of other comprehensive income for the three months ended March 31, 2014 and 2013 :

Schedule of Comprehensive Income
	Three Months Ended March 31,
				Tax
	Before-Tax			(Expense)			Net-of-Tax
	Amount			Benefit			Amount
2014
Net Unrealized Securities Holding Gains Arising During the Period	$	399		$	(158	)	$	241
Reclassification Adjustment for Securities Gains Included in Net Income	—			—			—
Amortization of Net Retirement Plan Actuarial Loss	116			(46		)	70
Accretion of Net Retirement Plan Prior Service Credit	(22		)	9			(13		)
Other Comprehensive Income	$	493		$	(195	)	$	298
2013
Net Unrealized Securities Holding Gains Arising During the Period	$	367		$	(147	)	$	220
Reclassification Adjustment for Securities Gains Included in Net Income	(527		)	209			(318		)
Amortization of Net Retirement Plan Actuarial Loss	391			(155		)	236
Accretion of Net Retirement Plan Prior Service Credit	—			—			—
Other Comprehensive Income	$	231		$	(93	)	$	138

Changes in Accumulated Other Comprehensive Income By Component [Table Text Block]

The following table presents the changes in accumulated other comprehensive income by component:

Changes in Accumulated Other Comprehensive Income by Component (1)
	Unrealized			Defined Benefit Plan Items
	Gains and
	Losses on						Net Prior
	Available-for-			Net Gain			Service
	Sale Securities			(Loss)			(Cost ) Credit			Total
For the Year-To-Date periods ended:
December 31, 2013	$	2,374		$	(6,697	)	$	(50	)	$	(4,373	)
Other comprehensive income before reclassifications	241			—			—			241
Amounts reclassified from accumulated other comprehensive income	—			70			(13		)	57
Net current-period other comprehensive income	241			70			(13		)	298
March 31, 2014	$	2,615		$	(6,627	)	$	(63	)	$	(4,075	)
December 31, 2012	$	5,625		$	(14,036	)	$	(51	)	$	(8,462	)
Other comprehensive income before reclassifications	220			—			—			220
Amounts reclassified from accumulated other comprehensive income	(318		)	236			—			(82		)
Net current-period other comprehensive income	(98		)	236			—			138
March 31, 2013	$	5,527		$	(13,800	)	$	(51	)	$	(8,324	)

(1) All amounts are net of tax. Amounts in parentheses indicate debits.

Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]

The following table presents the reclassifications out of accumulated other comprehensive income:

Reclassifications Out of Accumulated Other Comprehensive Income (1)
	Amounts Reclassified
Details about Accumulated Other	from Accumulated Other				Affected Line Item in the Statement
Comprehensive Income Components	Comprehensive Income				Where Net Income Is Presented
For the Year-to-date periods ended:
March 31, 2014
Unrealized gains and losses on available-for-sale securities
	$	—			Gain on Securities Transactions
	—				Total before tax
	—				Provision for Income Taxes
	$	—			Net of tax
Amortization of defined benefit pension items
Prior-service costs	$	22		(2)	Salaries and Employee Benefits
Actuarial gains/(losses)	(116		)	(2)	Salaries and Employee Benefits
	(94		)		Total before tax
	37				Provision for Income Taxes
	$	(57	)		Net of tax
Total reclassifications for the period	$	(57	)		Net of tax
March 31, 2013
Unrealized gains and losses on available-for-sale securities
	$	527			Gain on Securities Transactions
	527				Total before tax
	(209		)		Provision for Income Taxes
	$	318			Net of tax
Amortization of defined benefit pension items
Prior-service costs	—			(2)	Salaries and Employee Benefits
Actuarial gains/(losses)	$	(391	)	(2)	Salaries and Employee Benefits
	(391		)		Total before tax
	155				Provision for Income Taxes
	$	(236	)		Net of tax
Total reclassifications for the period	$	82			Net of tax

(1) Amounts in parentheses indicate debits to profit/loss.

(2) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see pension footnote for additional details.).

XML

Comprehensive Income Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Schedule of Comprehensive Income [Line Items]
Other comprehensive income, before reclassifications, net of tax	$ 241	[1]	$ 220	[1]
Reclassification from Accumulated Other Comprehensive Income, net of tax	57	[1]	(82)	[1]
Other Comprehensive Income (Loss), before Tax	493		231
Other Comprehensive Income (Loss), Tax	(195)		(93)
Other Comprehensive (Loss) Income	298	[1]	138	[1]
Unrealized Gains and Losses on Available for Sale Securities [Member]
Schedule of Comprehensive Income [Line Items]
Other Comprehensive Income Loss Before Reclassifications Before Tax	399		367
Other Comprehensive Income Loss Before Reclassifications Tax (Expense) Benefit	(158)		(147)
Other comprehensive income, before reclassifications, net of tax	241	[1]	220	[1]
Reclassification From Accumulated Other Comprehensive Income Current Period Before Tax	0		(527)
Reclassification From Accumulated Other Comprehensive Income Current Period Tax (Expense) Benefit	0		209
Reclassification from Accumulated Other Comprehensive Income, net of tax	0	[1]	(318)	[1]
Other Comprehensive (Loss) Income	241	[1]	(98)	[1]
Amortization of Net Retirement Plan Actuarial Loss [Member]
Schedule of Comprehensive Income [Line Items]
Other comprehensive income, before reclassifications, net of tax	0	[1]	0	[1]
Reclassification From Accumulated Other Comprehensive Income Current Period Before Tax	116		391
Reclassification From Accumulated Other Comprehensive Income Current Period Tax (Expense) Benefit	(46)		(155)
Reclassification from Accumulated Other Comprehensive Income, net of tax	70	[1]	236	[1]
Other Comprehensive (Loss) Income	70	[1]	236	[1]
Accretion of Net Retirement Plan Prior Service Credit [Member]
Schedule of Comprehensive Income [Line Items]
Other comprehensive income, before reclassifications, net of tax	0	[1]	0	[1]
Reclassification From Accumulated Other Comprehensive Income Current Period Before Tax	(22)		0
Reclassification From Accumulated Other Comprehensive Income Current Period Tax (Expense) Benefit	9		0
Reclassification from Accumulated Other Comprehensive Income, net of tax	(13)	[1]	0	[1]
Other Comprehensive (Loss) Income	$ (13)	[1]	$ 0	[1]

[1] (1) All amounts are net of tax. Amounts in parentheses indicate debits.

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Retirement Plans (Tables)

3 Months Ended

Mar. 31, 2014

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Schedule of Defined Benefit Plans Disclosures [Table Text Block]

The following tables provide the components of net periodic benefit costs for the three-month periods ended March 31:

				Select
	Employees'			Executive		Postretirement
	Pension			Retirement		Benefit
	Plan			Plan		Plans
Net Periodic Benefit Cost
For the Three Months Ended March 31, 2014:
Service Cost	$	377		$	—	$	53
Interest Cost	330			61		110
Expected Return on Plan Assets	(722		)	—		—
Amortization of Prior Service (Credit) Cost	(11		)	18		(29		)
Amortization of Net Loss	86			23		7
Net Periodic Benefit Cost	$	60		$	102	$	141
Plan Contributions During the Period	$	—		$	119	$	142
Estimated Future Contributions in the Current Fiscal Year	—			357		426
For the Three Months Ended March 31, 2013:
Service Cost	$	367		$	22	$	51
Interest Cost	353			38		81
Expected Return on Plan Assets	(716		)	—		—
Amortization of Prior Service (Credit) Cost	9			20		(29		)
Amortization of Net Loss	312			38		41
Net Periodic Benefit Cost	$	325		$	118	$	144
Plan Contributions During the Period	$	—		$	111	$	81

We are not required to make a contribution to our qualified pension plan in 2014, and currently, we do not expect to make a contribution in 2014. Arrow makes contributions to its other post-retirement benefit plans in an amount equal to benefit payments for the year.

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Stockholders Equity Parenthetical (Parentheticals) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash Dividends Paid, per Share, in dollars per share	$ 0.25	$ 0.245
Stock Options Exercised, in shares	19,308	23,434
Shares Issued Under Directors Stock Plan - Shares, in shares	0	396
Shares Issued Under Employee Stock Purchase Plan - Shares, in shares	4,272	4,683
Purchase of Treasury Stock - Shares, in shares	45,608	54,231
Acquisition of Subsidiary - Shares, in shares	3,595	3,757
Allocation of ESOP Stock - Shares, in shares	7,878	7,718

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Balance Sheet Parenthetical (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Held-to-Maturity Securities, at Fair Value	$ 322,335	$ 302,305	$ 259,562
Preferred Stock, Par Value, in Dollars Per Share	$ 5	$ 5	$ 5
Preferred Stock, Shares Authorized, in Shares	1,000,000	1,000,000	1,000,000
Common Stock, Par Value, in Dollars Per Share	$ 1	$ 1	$ 1
Common Stock, Shares Authorized, in Shares	20,000,000	20,000,000	20,000,000
Common Stock, Shares Issued, in Shares	16,744,486	16,744,486	16,416,163
Unallocated ESOP Shares, in Shares	79,763	87,641	95,172
Treasury Stock, in Shares	4,315,156	4,296,723	4,310,578

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Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

FAIR VALUE OF FINANCIAL INSTRUMENTS (In Thousands)

FASB ASC Subtopic 820-10 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP) and requires certain disclosures about fair value measurements. We do not have any nonfinancial assets or liabilities measured at fair value on a recurring basis. The only assets or liabilities that Arrow measured at fair value on a recurring basis at March 31, 2014, December 31, 2013 and March 31, 2013 were securities available-for-sale. Arrow held no securities or liabilities for trading on such date.

The table below presents the financial instrument's fair value and the amounts within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement:

Fair Value of Assets and Liabilities Measured on a Recurring and Nonrecurring Basis
			Fair Value Measurements at Reporting Date Using:
	Fair Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Fair Value of Assets and Liabilities Measured on a Recurring Basis:
March 31, 2014
Securities Available-for Sale:
U.S. Agency Obligations	$	121,220	$	—	$	121,220	$	—
State and Municipal Obligations	125,410		—		125,410		—
Mortgage-Backed Securities - Residential	164,541		—		164,541		—
Corporate and Other Debt Securities	16,839		—		16,839		—
Mutual Funds and Equity Securities	1,220		—		1,220		—
Total Securities Available-for-Sale	$	429,230	$	—	$	429,230	$	—
December 31, 2013
Securities Available-for Sale:
U.S. Agency Obligations	$	136,475	$	—	$	136,475	$	—
State and Municipal Obligations	127,389		—		127,389		—
Mortgage-Backed Securities - Residential	175,778		—		175,778		—
Corporate and Other Debt Securities	16,798		—		16,798		—
Mutual Funds and Equity Securities	1,166		—		1,166		—
Total Securities Available-for Sale	$	457,606	$	—	$	457,606	$	—
March 31, 2013
Securities Available-for Sale:
U.S. Agency Obligations	$	132,153	$	—	$	132,153	$	—
State and Municipal Obligations	104,469		—		104,469		—
Mortgage-Backed Securities - Residential	228,323		—		228,323		—
Corporate and Other Debt Securities	12,691		—		12,691		—
Mutual Funds and Equity Securities	1,139		—		1,139		—
Total Securities Available-for Sale	$	478,775	$	—	$	478,775	$	—
Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis:
March 31, 2014
Other Real Estate Owned and Repossessed Assets, Net	$	198	$	—	$	—	$	198	$	(52	)
December 31, 2013
Other Real Estate Owned and Repossessed Assets, Net	$	144	$	—	$	—	$	144	$	(79	)
March 31, 2013
Other Real Estate Owned and Repossessed Assets, Net	$	1,194	$	—	$	—	$	1,194	$	(56	)

We determine the fair value of financial instruments under the following hierarchy:

• Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

• Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

• Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Fair Value Methodology for Assets and Liabilities Measured on a Recurring Basis

The fair value of Level 1 securities available-for-sale are based on unadjusted, quoted market prices from exchanges in active markets. The fair value of Level 2 securities available-for-sale are based on an independent bond and equity pricing service for identical assets or significantly similar securities and an independent equity pricing service for equity securities not actively traded.  The pricing service uses a variety of techniques to arrive at fair value including market maker bids, quotes and pricing models.  Inputs to the pricing models include recent trades, benchmark interest rates, spreads and actual and projected cash flows.  

Fair Value Methodology for Assets and Liabilities Measured on a Nonrecurring Basis

The fair value of collateral dependent impaired loans was based on third-party appraisals of the collateral. The fair value of other real estate owned was based on third-party appraisals. Other assets which might have been included in this table include mortgage servicing rights, goodwill and other intangible assets. Arrow evaluates each of these assets for impairment on a quarterly basis, with no impairment recognized for these assets at March 31, 2014, December 31, 2013 and March 31, 2013.

Fair Value by Balance Sheet Grouping

The following table presents a summary of the carrying amount, the fair value or an amount approximating fair value and the fair value hierarchy of Arrow’s financial instruments:

Schedule of Fair Values by Balance Sheet Grouping
					Fair Value Hierarchy
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
March 31, 2014
Cash and Cash Equivalents	$	76,050	$	76,050	$	76,050	$	—	$	—
Securities Available-for-Sale	429,230		429,230		—		429,230		—
Securities Held-to-Maturity	317,632		322,335		—		322,335		—
Federal Home Loan Bank and Federal   Reserve Bank Stock	3,896		3,896		3,896		—		—
Net Loans	1,295,787		1,306,043		—		—		1,306,043
Accrued Interest Receivable	6,808		6,808		6,808		—		—
Deposits	1,948,019		1,944,116		1,709,784		234,332		—
Federal Funds Purchased and Securities   Sold Under Agreements to Repurchase	13,787		13,787		13,787		—		—
Federal Home Loan Bank Term Advances	20,000		20,519		—		20,519		—
Junior Subordinated Obligations Issued   to Unconsolidated Subsidiary Trusts	20,000		20,000		—		20,000		—
Accrued Interest Payable	405		405		405		—		—
December 31, 2013
Cash and Cash Equivalents	$	49,980	$	49,980	$	49,980	$	—	$	—
Securities Available-for-Sale	457,606		457,606		—		457,606		—
Securities Held-to-Maturity	299,261		302,305		—		302,305		—
Federal Home Loan Bank and Federal   Reserve Bank Stock	6,281		6,281		6,281		—		—
Net Loans	1,252,038		1,266,020		—		—		1,266,020
Accrued Interest Receivable	5,745		5,745		5,745		—		—
Deposits	1,842,330		1,839,613		1,595,103		244,510		—
Federal Funds Purchased and Securities   Sold Under Agreements to Repurchase	11,777		11,777		11,777		—		—
Federal Home Loan Bank Term Advances	73,000		74,629		53,000		21,629		—
Junior Subordinated Obligations Issued   to Unconsolidated Subsidiary Trusts	20,000		20,000		—		20,000		—
Accrued Interest Payable	439		439		439		—		—
March 31, 2013
Cash and Cash Equivalents	$	137,174	$	137,174	$	137,174	$	—	$	—
Securities Available-for-Sale	478,775		478,775		—		478,775		—
Securities Held-to-Maturity	251,456		259,562		—		259,562		—
Federal Home Loan Bank and Federal   Reserve Bank Stock	4,493		4,493		4,493		—		—
Net Loans	1,150,156		1,167,063		—		—		1,167,063
Accrued Interest Receivable	6,481		6,481		6,481		—		—
Deposits	1,851,206		1,850,614		1,575,954		274,660		—
Federal Funds Purchased and Securities   Sold Under Agreements to Repurchase	12,166		12,166		12,166		—		—
Federal Home Loan Bank Term Advances	30,000		31,263		—		31,263		—
Junior Subordinated Obligations Issued   to Unconsolidated Subsidiary Trusts	20,000		20,000		—		20,000		—
Accrued Interest Payable	523		523		523		—		—

Fair Value Methodology for Financial Instruments Not Measured on a Recurring or Nonrecurring Basis

Securities held-to-maturity are fair valued utilizing an independent bond pricing service for identical assets or significantly similar securities.  The pricing service uses a variety of techniques to arrive at fair value including market maker bids, quotes and pricing models. Inputs to the pricing models include recent trades, benchmark interest rates, spreads and actual and projected cash flows.

Fair values for loans are estimated for portfolios of loans with similar financial characteristics.  Loans are segregated by type such as commercial, commercial real estate, residential mortgage, indirect and other consumer loans.  Each loan category is further segmented into fixed and adjustable interest rate terms and by performing and nonperforming categories.  The fair value of performing loans is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan.  The estimate of maturity is based on historical experience with repayments for each loan classification, modified, as required, by an estimate of the effect of current economic and lending conditions.   Fair value for nonperforming loans is generally based on recent external appraisals.  If appraisals are not available, estimated cash flows are discounted using a rate commensurate with the risk associated with the estimated cash flows.  Assumptions regarding credit risk, cash flows and discount rates are judgmentally determined using available market information and specific borrower information.

The fair value of time deposits is based on the discounted value of contractual cash flows, except that the fair value is limited to the extent that the customer could redeem the certificate after imposition of a premature withdrawal penalty.  The discount rates are estimated using the FHLBNY yield curve, which is considered representative of Arrow’s time deposit rates. The fair value of all other deposits is equal to the carrying value.

The fair value of FHLBNY advances is estimated based on the discounted value of contractual cash flows.  The discount rate is estimated using current rates on FHLBNY advances with similar maturities and call features.

Based on Arrow’s capital adequacy, the book value of the outstanding trust preferred securities (Junior Subordinated Obligations Issued to Unconsolidated Subsidiary Trusts) are considered to approximate fair value since the interest rates are variable (indexed to LIBOR) and Arrow is well-capitalized.

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Document and Entity Information Document	3 Months Ended
	Mar. 31, 2014	Apr. 30, 2014
Entity Information [Line Items]
Entity Registrant Name	Arrow Financial Corporation
Entity Central Index Key	0000717538
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		12,351,013
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes

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Accounting Policies Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

New Accounting Standards Updates [Policy Text Block]

New Accounting Standards Updates (ASU): During 2014, through the date of this report, the FASB issued eight accounting standards updates, only two of which apply to Arrow.

ASU 2014-01 "Investments-Equity Method and Joint Ventures" allows an entity that invests in affordable housing projects that qualify for low-income housing tax credits to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense. The standard is effective for annual years beginning after December 15, 2014, with earlier adoption allowed. We adopted the proportional amortization method in the first quarter of 2014. The adoption did not have a material impact on our financial condition or results of operations.

ASU 2014-04 "Receivables - Trouble Debt Restructurings by Creditors" provides additional guidance on when an in substance repossession or foreclosure occurs and is effective for annual periods beginning after December 15, 2014. We are evaluating the impact of adopting this standard, and we do not expect that it will have a material impact on our financial condition or results of operations.

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Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
INTEREST AND DIVIDEND INCOME
Interest and Fees on Loans	$ 12,774		$ 12,783
Interest on Deposits at Banks	13		27
Interest and Dividends on Investment Securities:
Fully Taxable	2,008		1,796
Exempt from Federal Taxes	1,471		1,390
Total Interest and Dividend Income	16,266		15,996
INTEREST EXPENSE
NOW Accounts	464		778
Savings Deposits	219		268
Time Deposits of $100,000 or More	230		319
Other Time Deposits	391		554
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase	4		3
Federal Home Loan Bank Advances	145		173
Junior Subordinated Obligations Issued to Unconsolidated Subsidary Trusts	141		144
Total Interest Expense	1,594		2,239
NET INTEREST INCOME	14,672		13,757
Provision for Loan Losses	458		100
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	14,214		13,657
NONINTEREST INCOME
Income from Fiduciary Activities	1,873		1,574
Fees for Other Services to Customers	2,194		2,282
Insurance Commissions	2,444		2,028
Net Gain on Securities Transactions	0		527
Net Gains on Sale of Loans	123		607
Other Operating Income	252		156
Total Noninterest Income	6,886		7,174
NONINTEREST EXPENSE
Salaries and Employee Benefits	7,642		7,621
Occupancy Expense, Net	2,341		2,276
FDIC Assessments	273		264
Other Operating Expense	3,210		3,250
Total Noninterest Expense	13,466		13,411
INCOME BEFORE PROVISION FOR INCOME TAXES	7,634		7,420
Provision for Income Taxes	2,314		2,239
Net Income	$ 5,320		$ 5,181
Average Shares Outstanding:
Basic, in shares	12,354	[1]	12,272	[1]
Diluted, in shares	12,378	[1]	12,290	[1],[2]
Per Common Share:
Basic Earnings, in dollars per share	$ 0.43	[1]	$ 0.42	[1]
Diluted Earnings, in dollars per share	$ 0.43	[1]	$ 0.42	[1]

[1] Share and Per Share Amounts have been restated for the September 2013 2% stock dividend.

[2] All share and per share amounts have been adjusted for the September 2013 2% stock dividend

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Guarantees

3 Months Ended

Mar. 31, 2014

Guarantees [Abstract]

Guarantees [Text Block]

GUARANTEES (In Thousands)

The following table presents the balance for standby letters of credit for the periods ended March 31, 2014, December 31, 2013 and March 31, 2013:

Loan Commitments and Letters of Credit
	March 31, 2014		December 31, 2013		March 31, 2013
Notional Amount:
Commitments to Extend Credit	$	235,549	$	237,940	$	215,498
Standby Letters of Credit	3,333		3,345		3,562
Fair Value:
Commitments to Extend Credit	$	—	$	—	$	—
Standby Letters of Credit	56		65		53

Arrow is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit and standby letters of credit.  Commitments to extend credit include home equity lines of credit, commitments for residential and commercial construction loans and other personal and commercial lines of credit.  Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.  The contract or notional amounts of those instruments reflect the extent of the involvement Arrow has in particular classes of financial instruments.

Arrow's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments.  Arrow uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.  Arrow evaluates each customer's creditworthiness on a case-by-case basis.  Home equity lines of credit are secured by residential real estate.  Construction commitments are secured by underlying real estate.  For other lines of credit, the amount of collateral obtained, if deemed necessary by Arrow upon extension of credit, is based on management's credit evaluation of the counterparty.  Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing commercial properties.  Most of the commitments are variable rate instruments.

Arrow has issued conditional commitments in the form of standby letters of credit to guarantee payment on behalf of a customer and guarantee the performance of a customer to a third party.  Standby letters of credit generally arise in connection with lending relationships. The credit risk involved in issuing these instruments is essentially the same as that involved in extending loans to customers. Contingent obligations under standby letters of credit at March 31, 2014, December 31, 2013 and March 31, 2013 represent the maximum potential future payments Arrow could be required to make.  Typically, these instruments have terms of 12 months or less and expire unused; therefore, the total amounts do not necessarily represent future cash requirements.  Each customer is evaluated individually for creditworthiness under the same underwriting standards used for commitments to extend credit and on-balance sheet instruments. Company policies governing loan collateral apply to standby letters of credit at the time of credit extension.  Loan-to-value ratios generally range from 50% for movable assets, such as inventory, to 100% for liquid assets, such as bank CD's.  Fees for standby letters of credit typically range from 1% to 3% of the notional amount.  Fees are collected upfront and are amortized over the life of the commitment. The fair values of Arrow's standby letters of credit at March 31, 2014, December 31, 2013 and March 31, 2013, in the table above, were the same as the carrying amounts.  The fair value of standby letters of credit is based on the fees currently charged for similar agreements or the cost to terminate the arrangement with the counterparties.

The fair value of commitments to extend credit is determined by estimating the fees to enter into similar agreements, taking into account the remaining terms and present creditworthiness of the counterparties, and for fixed rate loan commitments, the difference between the current and committed interest rates.  Arrow provides several types of commercial lines of credit and standby letters of credit to its commercial customers.  The pricing of these services is not isolated as Arrow considers the customer's complete deposit and borrowing relationship in pricing individual products and services.  The commitments to extend credit also include commitments under home equity lines of credit, for which Arrow charges no fee.  The carrying value and fair value of commitments to extend credit are not material and Arrow does not expect to incur any material loss as a result of these commitments.

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Loans

3 Months Ended

Mar. 31, 2014

Loans and Leases Receivable Disclosure [Abstract]

Financing Receivables [Text Block]

LOANS (In Thousands)

Loan Categories and Past Due Loans

The following table presents loan balances outstanding as of March 31, 2014, December 31, 2013 and March 31, 2013 and an analysis of the recorded investment in loans that are past due at these dates.  Generally, Arrow considers a loan past due 30 or more days if the borrower is two or more payments past due.   Loans held-for-sale of $502, $64 and $864 as of March 31, 2014, December 31, 2013 and March 31, 2013, respectively, are included in the residential real estate loan balances.

Past Due Loans
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Total
March 31, 2014
Loans Past Due 30-59 Days	$	597	$	—	$	1,381	$	73	$	2,641	$	2,026	$	6,718
Loans Past Due 60-89 Days	579		—		237		16		512		438		1,782
Loans Past Due 90 or more Days	29		—		1,785		—		150		2,244		4,208
Total Loans Past Due	1,205		—		3,403		89		3,303		4,708		12,708
Current Loans	88,671		28,026		305,438		7,694		397,318		470,568		1,297,715
Total Loans	$	89,876	$	28,026	$	308,841	$	7,783	$	400,621	$	475,276	$	1,310,423
Loans 90 or More Days Past Due   and Still Accruing Interest	$	—	$	—	$	—	$	—	$	—	$	347	$	347
Nonaccrual Loans	$	182	$	—	$	2,042	$	1	$	372	$	3,687	$	6,284
December 31, 2013
Loans Past Due 30-59 Days	$	304	$	—	$	200	$	37	$	3,233	$	529	$	4,303
Loans Past Due 60-89 Days	601		—		1,200		19		1,041		1,527		4,388
Loans Past Due 90 or more Days	177		—		2,034		—		98		3,113		5,422
Total Loans Past Due	1,082		—		3,434		56		4,372		5,169		14,113
Current Loans	86,811		27,815		284,685		7,593		389,832		455,623		1,252,359
Total Loans	$	87,893	$	27,815	$	288,119	$	7,649	$	394,204	$	460,792	$	1,266,472
Loans 90 or More Days Past Due   and Still Accruing Interest	$	28	$	—	$	—	$	—	$	—	$	624	$	652
Nonaccrual Loans	$	352	$	—	$	2,048	$	—	$	219	$	3,860	$	6,479
March 31, 2013
Loans Past Due 30-59 Days	$	428	$	—	$	1,351	$	26	$	1,986	$	1,481	$	5,272
Loans Past Due 60-89 Days	421		—		200		10		375		1,058		2,064
Loans Past Due 90 or more Days	130		—		1,886		—		98		1,302		3,416
Total Loans Past Due	979		—		3,437		36		2,459		3,841		10,752
Current Loans	88,188		27,380		251,805		6,995		351,542		428,097		1,154,007
Total Loans	$	89,167	$	27,380	$	255,242	$	7,031	$	354,001	$	431,938	$	1,164,759
Loans 90 or More Days Past Due   and Still Accruing Interest	$	—	$	—	$	—	$	—	$	—	$	259	$	259
Nonaccrual Loans	$	253	$	—	$	1,953	$	4	$	334	$	2,674	$	5,218

The Company disaggregates its loan portfolio into the following six categories:

Commercial - The Company offers a variety of loan options to meet the specific needs of our commercial customers including term loans, time notes and lines of credit. Such loans are made available to businesses for working capital needs such as inventory and receivables, business expansion and equipment purchases. Generally, a collateral lien is placed on equipment or other assets owned by the borrower. These loans carry a higher risk than commercial real estate loans due to the nature of the underlying collateral, which can be business assets such as equipment and accounts receivable and generally have a lower liquidation value than real estate. In the event of default by the borrower, the Company may be required to liquidate collateral at deeply discounted values. To reduce the risk, management usually obtains personal guarantees of the borrowers.

Commercial Construction - The Company offers commercial construction and land development loans to finance projects, primarily within the communities that we serve. Many projects will ultimately be used by the borrowers’ businesses, while others are developed for resale. These real estate loans are secured by first liens on the real estate, which may include apartments, commercial structures, housing businesses, healthcare facilities, and both owner-occupied and nonowner-occupied facilities. There is enhanced risk during the construction period, since the loan is secured by an incomplete project.

Commercial Real Estate - The Company offers commercial real estate loans to finance real estate purchases, refinancings, expansions and improvements to commercial properties. Commercial real estate loans are made to finance the purchases of real property which generally consists of real estate with completed structures. These commercial real estate loans are secured by first liens on the real estate, which may include apartments, commercial structures, housing businesses, healthcare facilities, and both owner and non owner-occupied facilities. These loans are typically less risky than commercial loans, since they are secured by real estate and buildings, and are generally originated in amounts of no more than 80% of the appraised value of the property.

Other Consumer Loans - The Company offers a variety of consumer installment loans to finance personal expenditures. Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from one to five years, based upon the nature of the collateral and the size of the loan. In addition to installment loans, the Company also offers personal lines of credit and overdraft protection. Several loans are unsecured, which carry a higher risk of loss.

Automobile - The Company primarily finances the purchases of automobiles indirectly through dealer relationships located throughout upstate New York and Vermont. Most of these loans carry a fixed rate of interest with principal repayment terms typically ranging from three to seven years. The majority of indirect consumer loans are underwritten on a secured basis using the underlying collateral being financed.

Residential Real Estate Mortgages - Residential real estate loans consist primarily of loans secured by first or second mortgages on primary residences. We originate adjustable-rate and fixed-rate one-to-four-family residential real estate loans for the construction, purchase or refinancing of an existing mortgage. These loans are collateralized primarily by owner-occupied properties generally located in the Company’s market area. Loans on one-to-four-family residential real estate are generally originated in amounts of no more than 85% of the purchase price or appraised value (whichever is lower), or have private mortgage insurance. The Company’s underwriting analysis for residential mortgage loans typically includes credit verification, independent appraisals, and a review of the borrower’s financial condition. Mortgage title insurance and hazard insurance are normally required. Construction loans have a unique risk, because they are secured by an incomplete dwelling. This risk is reduced through periodic site inspections, including one at each loan draw period. In addition, the Company offers fixed home equity loans as well as home equity lines of credit to consumers to finance home improvements, debt consolidation, education and other uses.  Our policy allows for a maximum loan to value ratio of 80%, although periodically higher advances are allowed.  The Company originates home equity lines of credit and second mortgage loans (loans secured by a second junior lien position on one-to-four-family residential real estate).  Risk is generally reduced through underwriting criteria, which include credit verification, appraisals, a review of the borrower's financial condition, and personal cash flows.  A security interest, with title insurance when necessary, is taken in the underlying real estate.

Allowance for Loan Losses

The following table presents a roll-forward of the allowance for loan losses and other information pertaining to the allowance for loan losses:

Allowance for Loan Losses
				Commercial		Commercial			Other
	Commercial			Construction		Real Estate			Consumer			Automobile			Residential			Unallocated			Total
Roll-forward of the Allowance for Loan Losses for the Year-to-Date Periods:
December 31, 2013	$	1,886		$	417	$	3,545		$	272		$	4,206		$	3,026		$	1,082		$	14,434
Charge-offs	(123		)	—		—			(14		)	(183		)	(16		)	—			(336		)
Recoveries	19			—		—			—			61			—			—			80
Provision	15			3		233			22			222			67			(104		)	458
March 31, 2014	$	1,797		$	420	$	3,778		$	280		$	4,306		$	3,077		$	978		$	14,636
December 31, 2012	$	2,344		$	601	$	3,050		$	304		$	4,536		$	3,405		$	1,058		$	15,298
Charge-offs	(773		)	—		(11		)	(8		)	(98		)	—			—			(890		)
Recoveries	4			—		—			—			91			—			—			95
Provision	44			11		340			12			(235		)	(13		)	(59		)	100
March 31, 2013	$	1,619		$	612	$	3,379		$	308		$	4,294		$	3,392		$	999		$	14,603

Allowance for Loan Losses
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Unallocated		Total
March 31, 2014
Allowance for loan losses - Loans Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance for loan losses - Loans Collectively Evaluated for Impairment	$	1,797	$	420	$	3,778	$	280	$	4,306	$	3,077	$	978	$	14,636
Ending Loan Balance - Individually Evaluated for Impairment	$	214	$	—	$	1,810	$	—	$	144	$	1,913	$	—	$	4,081
Ending Loan Balance - Collectively Evaluated for Impairment	$	89,662	$	28,026	$	307,031	$	7,783	$	400,477	$	473,363	$	—	$	1,306,342
December 31, 2013
Allowance for loan losses - Loans Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance for loan losses - Loans Collectively Evaluated for Impairment	$	1,886	$	417	$	3,545	$	272	$	4,206	$	3,026	$	1,082	$	14,434
Ending Loan Balance - Individually Evaluated for Impairment	$	221	$	—	$	1,785	$	—	$	173	$	2,309	$	—	$	4,488
Ending Loan Balance - Collectively Evaluated for Impairment	$	87,672	$	27,815	$	286,334	$	7,649	$	394,031	$	458,483	$	—	$	1,261,984
March 31, 2013
Allowance for loan losses - Loans Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance for loan losses - Loans Collectively Evaluated for Impairment	$	1,619	$	612	$	3,379	$	308	$	4,294	$	3,392	$	999	$	14,603
Ending Loan Balance - Individually Evaluated for Impairment	$	37	$	—	$	1,505	$	—	$	182	$	1,085	$	—	$	2,809
Ending Loan Balance - Collectively Evaluated for Impairment	$	89,130	$	27,380	$	253,737	$	7,031	$	353,819	$	430,853	$	—	$	1,161,950

Through the provision for loan losses, an allowance for loan losses is maintained that reflects our best estimate of the inherent risk of loss in the Company’s loan portfolio as of the balance sheet date. Additions are made to the allowance for loan losses through a periodic provision for loan losses. Actual loan losses are charged against the allowance for loan losses when loans are deemed uncollectible and recoveries of amounts previously charged off are recorded as credits to the allowance for loan losses.

Our loan officers and risk managers meet at least quarterly to discuss and review the conditions and risks associated with certain criticized and classified commercial-related relationships. In addition, our independent internal loan review department performs periodic reviews of the risk ratings on individual loans in our commercial loan portfolio.

We use a two-step process to determine the provision for loan losses and the amount of the allowance for loan losses. We measure impairment on our impaired loans on a quarterly basis. Our impaired loans are generally nonaccrual loans over $250 thousand and all troubled debt restructured loans. Our impaired loans are generally considered to be collateral dependent with the specific reserve, if any, determined based on the value of the collateral less estimated costs to sell.

The remainder of the portfolio is evaluated on a pooled basis. For each homogeneous loan pool, we estimate a total loss factor based on the historical net loss rates adjusted for applicable qualitative factors. We update the total loss factors assigned to each loan category on a quarterly basis. For the commercial, commercial construction, and commercial real estate categories, we further segregate the loan categories by credit risk profile (pools of loans graded satisfactory, special mention and substandard). Additional description of the credit risk classifications is detailed in the Credit Quality Indicators section of this note.

We determine the annualized historical net loss rate for each loan category using a trailing three-year net charge-off average. While historical net loss experience provides a reasonable starting point for our analysis, historical net losses, or even recent trends in net losses, do not by themselves form a sufficient basis to determine the appropriate level of the allowance for loan losses. Therefore, we also consider and adjust historical net loss factors for qualitative factors that impact the inherent risk of loss associated with our loan categories within our total loan portfolio. These include:

• Changes in the volume and severity of past due, nonaccrual and adversely classified loans

• Changes in the nature and volume of the portfolio and in the terms of loans

• Changes in the value of the underlying collateral for collateral dependent loans

• Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses

• Changes in the quality of the loan review system

• Changes in the experience, ability, and depth of lending management and other relevant staff

• Changes in international, national, regional, and local economic and business conditions and developments that affect the collectibility of the portfolio

• The existence and effect of any concentrations of credit, and changes in the level of such concentrations

• The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the  existing portfolio or pool

Further, due to the imprecise nature of the loan loss estimation process, the risk attributes of our loan portfolio may not be fully captured in data related to the determination of loss factors used to determine our analysis of the adequacy of the allowance for loan losses. Management, therefore, has established an unallocated portion within the allowance for loan losses reflecting the imprecision that naturally exists in the allowance for loan loss estimation process. The unallocated allowance for loan losses is not considered a significant component of the overall allowance for loan loss estimation process.

Credit Quality Indicators

The following table presents the credit quality indicators by loan category at March 31, 2014, December 31, 2013 and March 31, 2013:

Loan Credit Quality Indicators
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Total
March 31, 2014
Credit Risk Profile by Creditworthiness Category:
Satisfactory	$	82,263	$	28,026	$	287,532							$	397,821
Special Mention	960		—		614								1,574
Substandard	6,653		—		20,695								27,348
Doubtful	—		—		—								—
Credit Risk Profile Based on Payment Activity:
Performing							$	7,782	$	400,249	$	471,242	879,273
Nonperforming							1		372		4,034		4,407
December 31, 2013
Credit Risk Profile by Creditworthiness Category:
Satisfactory	79,966		27,815		267,612								375,393
Special Mention	204		—		634								838
Substandard	7,723		—		19,873								27,596
Doubtful	—		—		—								—
Credit Risk Profile Based on Payment Activity:
Performing							7,649		393,985		456,308		857,942
Nonperforming							—		219		4,484		4,703
March 31, 2013
Credit Risk Profile by Creditworthiness Category:
Satisfactory	82,063		26,180		234,609								342,852
Special Mention	183		—		1,385								1,568
Substandard	6,921		1,200		19,248								27,369
Doubtful	—		—		—								—
Credit Risk Profile Based on Payment Activity:
Performing							7,027		353,667		429,004		789,698
Nonperforming							4		334		2,934		3,272

We use an internally developed system of five credit quality indicators to rate the credit worthiness of each commercial loan defined as follows: 1) Satisfactory - "Satisfactory" borrowers have acceptable financial condition with satisfactory record of earnings and sufficient historical and projected cash flow to service the debt.  Borrowers have satisfactory repayment histories and primary and secondary sources of repayment can be clearly identified; 2) Special Mention - Loans in this category have potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date.  "Special mention" assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.  Loans which might be assigned this risk rating include loans to borrowers with deteriorating financial strength and/or earnings record and loans with potential for problems due to weakening economic or market conditions; 3) Substandard - Loans classified as “substandard” are inadequately protected by the current sound net worth or paying capacity of the borrower or the collateral pledged, if any.  Loans in this category have well defined weaknesses that jeopardize the repayment.  They are characterized by the distinct possibility that the bank will sustain some loss if the deficiencies are not corrected.  “Substandard” loans may include loans which are likely to require liquidation of collateral to effect repayment, and other loans where character or ability to repay has become suspect. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard; 4) Doubtful - Loans classified as “doubtful” have all of the weaknesses inherent in those classified as “substandard” with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions, and values highly questionable and improbable.  Although possibility of loss is extremely high, classification of these loans as “loss” has been deferred due to specific pending factors or events which may strengthen the value (i.e. possibility of additional collateral, injection of capital, collateral liquidation, debt restructure, economic recovery, etc).  Loans classified as “doubtful” need to be placed on non-accrual; and 5) Loss - Loans classified as “loss” are considered uncollectible and of such little value that their continuance as bankable assets is not warranted.  As of the date of the balance sheet, all loans in this category have been charged-off to the allowance for loan losses.  Commercial loans are evaluated on an annual basis, unless the credit quality indicator falls to a level of "substandard" or below, when the loan is evaluated quarterly.  The credit quality indicator is one of the factors used to determine any loss, as further described in this footnote.

For the purposes of the table above, nonperforming consumer loans are those loans on nonaccrual status or are 90 days or more past due and still accruing interest.

Impaired Loans

The following table presents information on impaired loans based on whether the impaired loan has a recorded related allowance or has no recorded related allowance:

Impaired Loans
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Total
March 31, 2014
Recorded Investment:
With No Related Allowance	$	214	$	—	$	1,810	$	—	$	144	$	1,913	$	4,081
With a Related Allowance	—		—		—		—		—		—		—
Unpaid Principal Balance:
With No Related Allowance	214		—		1,810		—		144		1,913		4,081
With a Related Allowance	—		—		—		—		—		—		—
December 31, 2013
Recorded Investment:
With No Related Allowance	$	221	$	—	$	1,785	$	—	$	173	$	2,309	$	4,488
With a Related Allowance	—		—		—		—		—		—		—
Unpaid Principal Balance:
With No Related Allowance	221		—		1,785		—		173		2,309		4,488
With a Related Allowance	—		—		—		—		—		—		—
March 31, 2013
Recorded Investment:
With No Related Allowance	$	37	$	—	$	1,505	$	—	$	182	$	1,085	$	2,809
With a Related Allowance	—		—		—		—		—		—		—
Unpaid Principal Balance:
With No Related Allowance	37		—		1,505		—		182		1,085		$	2,809
With a Related Allowance	—		—		—		—		—		—		—
For the Year-To-Date Period Ended:
March 31, 2014
Average Recorded Balance:
With No Related Allowance	$	218	$	—	$	1,798	$	—	$	159	$	2,111	$	4,286
With a Related Allowance	—		—		—		—		—		—		—
Interest Income Recognized:
With No Related Allowance	3		—		10		—		2		1		16
With a Related Allowance	—		—		—		—		—		—		—
Cash Basis Income:
With No Related Allowance	—		—		—		—		—		—		—
With a Related Allowance	—		—		—		—		—		—		—
March 31, 2013
Average Recorded Balance:
With No Related Allowance	$	41	$	—	$	2,017	$	—	$	193	$	1,088	$	3,339
With a Related Allowance	694		—		—		—		—		—		694
Interest Income Recognized:
With No Related Allowance	1		—		—		—		2		4		7
With a Related Allowance	72		—		—		—		—		—		72
Cash Basis Income:
With No Related Allowance	—		—		—		—		—		—		—
With a Related Allowance	72		—		—		—		—		—		72

At March 31, 2014, December 31, 2013 and March 31, 2013, all impaired loans were considered to be collateral dependent and were therefore evaluated for impairment based on the fair value of collateral less estimated cost to sell. There was no allowance for loan losses allocated to impaired loans at March 31, 2014. Interest income recognized in the table above, represents income earned after the loans became impaired and includes restructured loans in compliance with their modified terms and nonaccrual loans where we have recognized interest income on a cash basis.

Loans Modified in Trouble Debt Restructurings

The following table presents information on loans modified in trouble debt restructurings during the periods indicated:

Loans Modified in Trouble Debt Restructurings During the Period
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Total
For the Year-To-Date Period Ended:
March 31, 2014
Number of Loans	—		—		—		—		1		—		1
Pre-Modification Outstanding Recorded Investment	$	—	$	—	$	—	$	—	$	2	$	—	$	2
Post-Modification Outstanding Recorded Investment	$	—	$	—	$	—	$	—	$	2	$	—	$	2
March 31, 2013
Number of Loans	—		—		—		—		2		—		2
Pre-Modification Outstanding Recorded Investment	$	—	$	—	$	—	$	—	$	11	$	—	$	11
Post-Modification Outstanding Recorded Investment	$	—	$	—	$	—	$	—	$	11	$	—	$	11

In general, loans requiring modification are restructured to accommodate the projected cash-flows of the borrower. As indicated in the table above, no loans modified during the preceding twelve months subsequently defaulted as of March 31, 2014.

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Stock Based Compensation Plans (Tables)

3 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]

The following table presents a roll-forward of our stock option plans and grants issued during 2014:

.

Schedule of Share-based Compensation Arrangements
	Stock Option Plans
Roll-Forward of Shares Outstanding:
Outstanding at January 1, 2014	389,392
Granted	74,037
Exercised	(19,308		)
Forfeited	—
Outstanding at March 31, 2014	444,121
Exercisable at Period-End	307,765
Vested and Expected to Vest	136,356
Roll-Forward of Shares Outstanding - Weighted Average Exercise Price:
Outstanding at January 1, 2014	$	22.89
Granted	25.00
Exercised	24.55
Forfeited	—
Outstanding at March 31, 2014	23.17
Exercisable at Period-End	22.38
Vested and Expected to Vest	24.95
Grants Issued During 2013 - Weighted Average Information:
Fair Value	6.04
Fair Value Assumptions:
Dividend Yield	3.97		%
Expected Volatility	35.30		%
Risk Free Interest Rate	2.19		%
Expected Lives (in years)	6.85

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

The following table presents information on the amounts expensed for the periods ended March 31, 2014 and 2013:

Share-Based Compensation Expense
	For the Three Months Ended March 31,
	2014		2013
Share-Based Compensation Expense	$	90	$	97

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Investment Securities (Tables)

3 Months Ended

Mar. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Available-For-Sale Securities [Table Text Block]

The following table is the schedule of Available-For-Sale Securities at March 31, 2014, December 31, 2013 and March 31, 2013:

Available-For-Sale Securities
	U.S. Agency Obligations		State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Mutual Funds and Equity Securities		Total Available- For-Sale Securities
March 31, 2014
Available-For-Sale Securities,   at Amortized Cost	$	121,477	$	125,165	$	160,023	$	17,115	$	1,120	$	424,900
Available-For-Sale Securities,   at Fair Value	121,220		125,410		164,541		16,839		1,220		429,230
Gross Unrealized Gains	3		333		4,616		14		100		5,066
Gross Unrealized Losses	260		88		98		290		—		736
Available-For-Sale Securities,   Pledged as Collateral											329,039
Maturities of Debt Securities, at Amortized Cost:
Within One Year	—		49,942		9,544		—				59,486
From 1 - 5 Years	121,477		72,919		133,726		16,115				344,237
From 5 - 10 Years	—		1,624		16,753		—				18,377
Over 10 Years	—		680		—		1,000				1,680
Maturities of Debt Securities, at Fair Value:
Within One Year	—		49,991		9,714		—				59,705
From 1 - 5 Years	121,220		73,099		137,302		16,039				347,660
From 5 - 10 Years	—		1,640		17,525		—				19,165
Over 10 Years	—		680		—		800				1,480
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	50,778	$	17,937	$	10,613	$	5,868	$	—	$	85,196
12 Months or Longer	6,124		3,653		4,063		3,392		—		17,232

Available-For-Sale Securities
	U.S. Agency Obligations		State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Mutual Funds and Equity Securities		Total Available- For-Sale Securities
Total	$	56,902	$	21,590	$	14,676	$	9,260	$	—	$	102,428
Number of Securities in a   Continuous Loss Position	16		87		9		13		—		125
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	222	$	72	$	81	$	50	$	—	$	425
12 Months or Longer	38		16		17		240		—		311
Total	$	260	$	88	$	98	$	290	$	—	$	736
December 31, 2013
Available-For-Sale Securities,   at Amortized Cost	$	136,868	$	127,224	$	171,321	$	17,142	$	1,120	$	453,675
Available-For-Sale Securities,   at Fair Value	136,475		127,389		175,778		16,798		1,166		457,606
Gross Unrealized Gains	2		306		4,714		10		46		5,078
Gross Unrealized Losses	395		141		257		354		—		1,147
Available-For-Sale Securities,   Pledged as Collateral											243,769
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	60,664	$	29,967	$	15,190	$	7,375	$	—	$	113,196
12 Months or Longer	33,849		4,597		11,841		6,063		—		56,350
Total	$	94,513	$	34,564	$	27,031	$	13,438	$	—	$	169,546
Number of Securities in a   Continuous Loss Position	26		107		13		19		—		165
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	336	$	120	$	108	$	92	$	—	$	656
12 Months or Longer	59		21		149		262		—		491
Total	$	395	$	141	$	257	$	354	$	—	$	1,147
March 31, 2013
Available-For-Sale Securities,   at Amortized Cost	$	132,217	$	104,304	$	219,067	$	12,913	$	1,120	$	469,621
Available-For-Sale Securities,   at Fair Value	132,153		104,469		228,323		12,691		1,139		478,775
Gross Unrealized Gains	23		228		9,256		2		19		9,528
Gross Unrealized Losses	87		63		—		224		—		374
Available-For-Sale Securities,   Pledged as Collateral											274,433
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	94,909	$	31,325	$	3	$	8,452	$	—	$	134,689
12 Months or Longer	—		1,481		—		—		—		1,481
Total	$	94,909	$	32,806	$	3	$	8,452	$	—	$	136,170
Number of Securities in a   Continuous Loss Position	28		154		1		11		—		194

Available-For-Sale Securities
	U.S. Agency Obligations		State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Mutual Funds and Equity Securities		Total Available- For-Sale Securities
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	87	$	61	$	—	$	224	$	—	$	372
12 Months or Longer	—		2		—		—		—		2
Total	$	87	$	63	$	—	$	224	$	—	$	374

Held-To-Maturity Securities [Table Text Block]

The following table is the schedule of Held-To-Maturity Securities at March 31, 2014, December 31, 2013 and March 31, 2013:

Held-To-Maturity Securities
	State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Total Held-To Maturity Securities
March 31, 2014
Held-To-Maturity Securities,   at Amortized Cost	$	190,847	$	125,785	$	1,000	$	317,632
Held-To-Maturity Securities,   at Fair Value	195,524		125,811		1,000		322,335
Gross Unrealized Gains	5,042		274		—		5,316
Gross Unrealized Losses	365		248		—		613
Held-To-Maturity Securities,   Pledged as Collateral							316,632
Maturities of Debt Securities, at Amortized Cost:
Within One Year	31,895		—		—		31,895
From 1 - 5 Years	83,077		39,598		—		122,675
From 5 - 10 Years	72,886		86,187		—		159,073
Over 10 Years	2,989		—		1,000		3,989
Maturities of Debt Securities, at Fair Value:
Within One Year	31,941		—		—		31,941
From 1 - 5 Years	85,023		39,656		—		124,679
From 5 - 10 Years	75,467		86,155		—		161,622
Over 10 Years	3,093		—		1,000		4,093
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	19,696	$	43,049	$	—	$	62,745
12 Months or Longer	5,112		—		—		5,112
Total	$	24,808	$	43,049	$	—	$	67,857
Number of Securities in a   Continuous Loss Position	86		17		—		103
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	324	$	248	$	—	$	572
12 Months or Longer	41		—		—		41
Total	$	365	$	248	$	—	$	613

Held-To-Maturity Securities
	State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Total Held-To Maturity Securities
December 31, 2013
Held-To-Maturity Securities,   at Amortized Cost	$	198,206	$	100,055	$	1,000	$	299,261
Held-To-Maturity Securities,   at Fair Value	202,390		98,915		1,000		302,305
Gross Unrealized Gains	4,762		24		—		4,786
Gross Unrealized Losses	578		1,164		—		1,742
Held-To-Maturity Securities,   Pledged as Collateral							298,261
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	23,633	$	85,339	$	—	$	108,972
12 Months or Longer	5,111		—		—		5,111
Total	$	28,744	$	85,339	$	—	$	114,083
Number of Securities in a   Continuous Loss Position	101		36		—		137
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	519	$	1,164	$	—	$	1,683
12 Months or Longer	59		—		—		59
Total	$	578	$	1,164	$	—	$	1,742
March 31, 2013
Held-To-Maturity Securities,   at Amortized Cost	$	198,858	$	51,598	$	1,000	$	251,456
Held-To-Maturity Securities,   at Fair Value	206,141		52,421		1,000		259,562
Gross Unrealized Gains	7,317		823		—		8,140
Gross Unrealized Losses	34		—		—		34
Held-To-Maturity Securities,   Pledged as Collateral							250,456
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	8,794	$	—	$	—	$	8,794
12 Months or Longer	173		—		—		173
Total	$	8,967	$	—	$	—	$	8,967
Number of Securities in a   Continuous Loss Position	33		—		—		33
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	34	$	—	$	—	$	34
12 Months or Longer	—		—		—		—
Total	$	34	$	—	$	—	$	34

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Retirement Plans

3 Months Ended

Mar. 31, 2014

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

RETIREMENT PLANS (Dollars in Thousands)

The following tables provide the components of net periodic benefit costs for the three-month periods ended March 31:

				Select
	Employees'			Executive		Postretirement
	Pension			Retirement		Benefit
	Plan			Plan		Plans
Net Periodic Benefit Cost
For the Three Months Ended March 31, 2014:
Service Cost	$	377		$	—	$	53
Interest Cost	330			61		110
Expected Return on Plan Assets	(722		)	—		—
Amortization of Prior Service (Credit) Cost	(11		)	18		(29		)
Amortization of Net Loss	86			23		7
Net Periodic Benefit Cost	$	60		$	102	$	141
Plan Contributions During the Period	$	—		$	119	$	142
Estimated Future Contributions in the Current Fiscal Year	—			357		426
For the Three Months Ended March 31, 2013:
Service Cost	$	367		$	22	$	51
Interest Cost	353			38		81
Expected Return on Plan Assets	(716		)	—		—
Amortization of Prior Service (Credit) Cost	9			20		(29		)
Amortization of Net Loss	312			38		41
Net Periodic Benefit Cost	$	325		$	118	$	144
Plan Contributions During the Period	$	—		$	111	$	81

We are not required to make a contribution to our qualified pension plan in 2014, and currently, we do not expect to make a contribution in 2014. Arrow makes contributions to its other post-retirement benefit plans in an amount equal to benefit payments for the year.

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Comprehensive Income

3 Months Ended

Mar. 31, 2014

Comprehensive Income [Abstract]

Other Comprehensive Income, Noncontrolling Interest [Text Block]

COMPREHENSIVE INCOME (In Thousands)

The following table presents the components of other comprehensive income for the three months ended March 31, 2014 and 2013 :

Schedule of Comprehensive Income
	Three Months Ended March 31,
				Tax
	Before-Tax			(Expense)			Net-of-Tax
	Amount			Benefit			Amount
2014
Net Unrealized Securities Holding Gains Arising During the Period	$	399		$	(158	)	$	241
Reclassification Adjustment for Securities Gains Included in Net Income	—			—			—
Amortization of Net Retirement Plan Actuarial Loss	116			(46		)	70
Accretion of Net Retirement Plan Prior Service Credit	(22		)	9			(13		)
Other Comprehensive Income	$	493		$	(195	)	$	298
2013
Net Unrealized Securities Holding Gains Arising During the Period	$	367		$	(147	)	$	220
Reclassification Adjustment for Securities Gains Included in Net Income	(527		)	209			(318		)
Amortization of Net Retirement Plan Actuarial Loss	391			(155		)	236
Accretion of Net Retirement Plan Prior Service Credit	—			—			—
Other Comprehensive Income	$	231		$	(93	)	$	138

The following table presents the changes in accumulated other comprehensive income by component:

Changes in Accumulated Other Comprehensive Income by Component (1)
	Unrealized			Defined Benefit Plan Items
	Gains and
	Losses on						Net Prior
	Available-for-			Net Gain			Service
	Sale Securities			(Loss)			(Cost ) Credit			Total
For the Year-To-Date periods ended:
December 31, 2013	$	2,374		$	(6,697	)	$	(50	)	$	(4,373	)
Other comprehensive income before reclassifications	241			—			—			241
Amounts reclassified from accumulated other comprehensive income	—			70			(13		)	57
Net current-period other comprehensive income	241			70			(13		)	298
March 31, 2014	$	2,615		$	(6,627	)	$	(63	)	$	(4,075	)
December 31, 2012	$	5,625		$	(14,036	)	$	(51	)	$	(8,462	)
Other comprehensive income before reclassifications	220			—			—			220
Amounts reclassified from accumulated other comprehensive income	(318		)	236			—			(82		)
Net current-period other comprehensive income	(98		)	236			—			138
March 31, 2013	$	5,527		$	(13,800	)	$	(51	)	$	(8,324	)

(1) All amounts are net of tax. Amounts in parentheses indicate debits.

The following table presents the reclassifications out of accumulated other comprehensive income:

Reclassifications Out of Accumulated Other Comprehensive Income (1)
	Amounts Reclassified
Details about Accumulated Other	from Accumulated Other				Affected Line Item in the Statement
Comprehensive Income Components	Comprehensive Income				Where Net Income Is Presented
For the Year-to-date periods ended:
March 31, 2014
Unrealized gains and losses on available-for-sale securities
	$	—			Gain on Securities Transactions
	—				Total before tax
	—				Provision for Income Taxes
	$	—			Net of tax
Amortization of defined benefit pension items
Prior-service costs	$	22		(2)	Salaries and Employee Benefits
Actuarial gains/(losses)	(116		)	(2)	Salaries and Employee Benefits
	(94		)		Total before tax
	37				Provision for Income Taxes
	$	(57	)		Net of tax
Total reclassifications for the period	$	(57	)		Net of tax
March 31, 2013
Unrealized gains and losses on available-for-sale securities
	$	527			Gain on Securities Transactions
	527				Total before tax
	(209		)		Provision for Income Taxes
	$	318			Net of tax
Amortization of defined benefit pension items
Prior-service costs	—			(2)	Salaries and Employee Benefits
Actuarial gains/(losses)	$	(391	)	(2)	Salaries and Employee Benefits
	(391		)		Total before tax
	155				Provision for Income Taxes
	$	(236	)		Net of tax
Total reclassifications for the period	$	82			Net of tax

(1) Amounts in parentheses indicate debits to profit/loss.

(2) These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see pension footnote for additional details.).

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Stock Based Compensation Plans

3 Months Ended

Mar. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

STOCK BASED COMPENSATION PLANS

Under our 2013 Long-Term Incentive Plan, we granted options in the first quarter of 2014 to purchase shares of our common stock. The fair values of the options were estimated on the date of grant using the Black-Scholes option-pricing model. The fair value of our grants is expensed over the four year vesting period. Share and per share amounts have been restated for the September 2013 2% stock dividend.

The following table presents a roll-forward of our stock option plans and grants issued during 2014:

.

Schedule of Share-based Compensation Arrangements
	Stock Option Plans
Roll-Forward of Shares Outstanding:
Outstanding at January 1, 2014	389,392
Granted	74,037
Exercised	(19,308		)
Forfeited	—
Outstanding at March 31, 2014	444,121
Exercisable at Period-End	307,765
Vested and Expected to Vest	136,356
Roll-Forward of Shares Outstanding - Weighted Average Exercise Price:
Outstanding at January 1, 2014	$	22.89
Granted	25.00
Exercised	24.55
Forfeited	—
Outstanding at March 31, 2014	23.17
Exercisable at Period-End	22.38
Vested and Expected to Vest	24.95
Grants Issued During 2013 - Weighted Average Information:
Fair Value	6.04
Fair Value Assumptions:
Dividend Yield	3.97		%
Expected Volatility	35.30		%
Risk Free Interest Rate	2.19		%
Expected Lives (in years)	6.85

The following table presents information on the amounts expensed for the periods ended March 31, 2014 and 2013:

Share-Based Compensation Expense
	For the Three Months Ended March 31,
	2014		2013
Share-Based Compensation Expense	$	90	$	97

Arrow also sponsors an Employee Stock Purchase Plan under which employees purchase Arrow's common stock at a 5% discount below market price. Under current accounting guidance, a stock purchase plan with a discount of 5% or less is not considered a compensatory plan.

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Earnings Per Common Share

3 Months Ended

Mar. 31, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

EARNINGS PER COMMON SHARE (In Thousands, Except Per Share Amounts)

The following table presents a reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings per common share (“EPS”) for periods ended March 31, 2014 and 2013.  All share and per share amounts have been adjusted for the September 2013 2% stock dividend.

Earnings Per Share
	Year-to-Date Period Ended:
	March 31, 2014		March 31, 2013
Earnings Per Share - Basic:
Net Income	$	5,320	$	5,181
Weighted Average Shares - Basic	12,354		12,272
Earnings Per Share - Basic	$	0.43	$	0.42
Earnings Per Share - Diluted:
Net Income	$	5,320	$	5,181
Weighted Average Shares - Basic	12,354		12,272
Dilutive Average Shares Attributable to Stock Options	24		18
Weighted Average Shares - Diluted	12,378		12,290
Earnings Per Share - Diluted	$	0.43	$	0.42
Antidilutive Shares Excluded from the Calculation of Earnings Per Share	—		129

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Loans Supplemental Loan Information (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Loans and Leases Receivable, Other Information [Abstract]
Loans Held-for-sale	$ 502	$ 64	$ 864

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Guarantees (Tables)

3 Months Ended

Mar. 31, 2014

Guarantees [Abstract]

Schedule of Guarantor Obligations [Table Text Block]

The following table presents the balance for standby letters of credit for the periods ended March 31, 2014, December 31, 2013 and March 31, 2013:

Loan Commitments and Letters of Credit
	March 31, 2014		December 31, 2013		March 31, 2013
Notional Amount:
Commitments to Extend Credit	$	235,549	$	237,940	$	215,498
Standby Letters of Credit	3,333		3,345		3,562
Fair Value:
Commitments to Extend Credit	$	—	$	—	$	—
Standby Letters of Credit	56		65		53

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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

The table below presents the financial instrument's fair value and the amounts within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement:

Fair Value of Assets and Liabilities Measured on a Recurring and Nonrecurring Basis
			Fair Value Measurements at Reporting Date Using:
	Fair Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Fair Value of Assets and Liabilities Measured on a Recurring Basis:
March 31, 2014
Securities Available-for Sale:
U.S. Agency Obligations	$	121,220	$	—	$	121,220	$	—
State and Municipal Obligations	125,410		—		125,410		—
Mortgage-Backed Securities - Residential	164,541		—		164,541		—
Corporate and Other Debt Securities	16,839		—		16,839		—
Mutual Funds and Equity Securities	1,220		—		1,220		—
Total Securities Available-for-Sale	$	429,230	$	—	$	429,230	$	—
December 31, 2013
Securities Available-for Sale:
U.S. Agency Obligations	$	136,475	$	—	$	136,475	$	—
State and Municipal Obligations	127,389		—		127,389		—
Mortgage-Backed Securities - Residential	175,778		—		175,778		—
Corporate and Other Debt Securities	16,798		—		16,798		—
Mutual Funds and Equity Securities	1,166		—		1,166		—
Total Securities Available-for Sale	$	457,606	$	—	$	457,606	$	—
March 31, 2013
Securities Available-for Sale:
U.S. Agency Obligations	$	132,153	$	—	$	132,153	$	—
State and Municipal Obligations	104,469		—		104,469		—
Mortgage-Backed Securities - Residential	228,323		—		228,323		—
Corporate and Other Debt Securities	12,691		—		12,691		—
Mutual Funds and Equity Securities	1,139		—		1,139		—
Total Securities Available-for Sale	$	478,775	$	—	$	478,775	$	—
Fair Value of Assets and Liabilities Measured on a Nonrecurring Basis:
March 31, 2014
Other Real Estate Owned and Repossessed Assets, Net	$	198	$	—	$	—	$	198	$	(52	)
December 31, 2013
Other Real Estate Owned and Repossessed Assets, Net	$	144	$	—	$	—	$	144	$	(79	)
March 31, 2013
Other Real Estate Owned and Repossessed Assets, Net	$	1,194	$	—	$	—	$	1,194	$	(56	)

Fair Value, by Balance Sheet Grouping [Table Text Block]

The following table presents a summary of the carrying amount, the fair value or an amount approximating fair value and the fair value hierarchy of Arrow’s financial instruments:

Schedule of Fair Values by Balance Sheet Grouping
					Fair Value Hierarchy
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
March 31, 2014
Cash and Cash Equivalents	$	76,050	$	76,050	$	76,050	$	—	$	—
Securities Available-for-Sale	429,230		429,230		—		429,230		—
Securities Held-to-Maturity	317,632		322,335		—		322,335		—
Federal Home Loan Bank and Federal   Reserve Bank Stock	3,896		3,896		3,896		—		—
Net Loans	1,295,787		1,306,043		—		—		1,306,043
Accrued Interest Receivable	6,808		6,808		6,808		—		—
Deposits	1,948,019		1,944,116		1,709,784		234,332		—
Federal Funds Purchased and Securities   Sold Under Agreements to Repurchase	13,787		13,787		13,787		—		—
Federal Home Loan Bank Term Advances	20,000		20,519		—		20,519		—
Junior Subordinated Obligations Issued   to Unconsolidated Subsidiary Trusts	20,000		20,000		—		20,000		—
Accrued Interest Payable	405		405		405		—		—
December 31, 2013
Cash and Cash Equivalents	$	49,980	$	49,980	$	49,980	$	—	$	—
Securities Available-for-Sale	457,606		457,606		—		457,606		—
Securities Held-to-Maturity	299,261		302,305		—		302,305		—
Federal Home Loan Bank and Federal   Reserve Bank Stock	6,281		6,281		6,281		—		—
Net Loans	1,252,038		1,266,020		—		—		1,266,020
Accrued Interest Receivable	5,745		5,745		5,745		—		—
Deposits	1,842,330		1,839,613		1,595,103		244,510		—
Federal Funds Purchased and Securities   Sold Under Agreements to Repurchase	11,777		11,777		11,777		—		—
Federal Home Loan Bank Term Advances	73,000		74,629		53,000		21,629		—
Junior Subordinated Obligations Issued   to Unconsolidated Subsidiary Trusts	20,000		20,000		—		20,000		—
Accrued Interest Payable	439		439		439		—		—
March 31, 2013
Cash and Cash Equivalents	$	137,174	$	137,174	$	137,174	$	—	$	—
Securities Available-for-Sale	478,775		478,775		—		478,775		—
Securities Held-to-Maturity	251,456		259,562		—		259,562		—
Federal Home Loan Bank and Federal   Reserve Bank Stock	4,493		4,493		4,493		—		—
Net Loans	1,150,156		1,167,063		—		—		1,167,063
Accrued Interest Receivable	6,481		6,481		6,481		—		—
Deposits	1,851,206		1,850,614		1,575,954		274,660		—
Federal Funds Purchased and Securities   Sold Under Agreements to Repurchase	12,166		12,166		12,166		—		—
Federal Home Loan Bank Term Advances	30,000		31,263		—		31,263		—
Junior Subordinated Obligations Issued   to Unconsolidated Subsidiary Trusts	20,000		20,000		—		20,000		—
Accrued Interest Payable	523		523		523		—		—

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Retirement Plans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				12 Months Ended	3 Months Ended		12 Months Ended	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014 Employees' Pension Plan [Member]	Mar. 31, 2013 Employees' Pension Plan [Member]	Dec. 31, 2014 Employees' Pension Plan [Member] Scenario, Forecast [Member]	Mar. 31, 2014 Select Executive Retirement Plan [Member]	Mar. 31, 2013 Select Executive Retirement Plan [Member]	Dec. 31, 2014 Select Executive Retirement Plan [Member] Scenario, Forecast [Member]	Mar. 31, 2014 Post-Retirement Benefit Plans [Member]	Mar. 31, 2013 Post-Retirement Benefit Plans [Member]	Dec. 31, 2014 Post-Retirement Benefit Plans [Member] Scenario, Forecast [Member]
Net Periodic Benefit Cost [Line Items]
Service Cost			$ 377	$ 367		$ 0	$ 22		$ 53	$ 51
Interest Cost			330	353		61	38		110	81
Expected Return on Plan Assets			(722)	(716)		0	0		0	0
Amortization of Prior Service (Credit) Cost			(11)	9		18	20		(29)	(29)
Amortization of Net Loss			86	312		23	38		7	41
Net Periodic Benefit Cost			60	325		102	118		141	144
Contributions to Retirement Benefits Plans	(261)	(191)	0	0		119	111		142	81
Estimated Future Contributions in the Current Fiscal Year					$ 0			$ 357			$ 426

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Net Income	$ 5,320		$ 5,181
Other comprehensive income, before reclassifications, net of tax	241	[1]	220	[1]
Reclassification from Accumulated Other Comprehensive Income, net of tax	57	[1]	(82)	[1]
Other Comprehensive Income	298		138
Comprehensive Income	5,618		5,319
Unrealized Gains and Losses on Available for Sale Securities [Member]
Other comprehensive income, before reclassifications, net of tax	241	[1]	220	[1]
Reclassification from Accumulated Other Comprehensive Income, net of tax	0	[1]	(318)	[1]
Amortization of Net Retirement Plan Actuarial Loss [Member]
Other comprehensive income, before reclassifications, net of tax	0	[1]	0	[1]
Reclassification from Accumulated Other Comprehensive Income, net of tax	70	[1]	236	[1]
Accretion of Net Retirement Plan Prior Service Credit [Member]
Other comprehensive income, before reclassifications, net of tax	0	[1]	0	[1]
Reclassification from Accumulated Other Comprehensive Income, net of tax	$ (13)	[1]	$ 0	[1]

[1] (1) All amounts are net of tax. Amounts in parentheses indicate debits.

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Investment Securities

3 Months Ended

Mar. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

INVESTMENT SECURITIES (In Thousands)

The following table is the schedule of Available-For-Sale Securities at March 31, 2014, December 31, 2013 and March 31, 2013:

Available-For-Sale Securities
	U.S. Agency Obligations		State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Mutual Funds and Equity Securities		Total Available- For-Sale Securities
March 31, 2014
Available-For-Sale Securities,   at Amortized Cost	$	121,477	$	125,165	$	160,023	$	17,115	$	1,120	$	424,900
Available-For-Sale Securities,   at Fair Value	121,220		125,410		164,541		16,839		1,220		429,230
Gross Unrealized Gains	3		333		4,616		14		100		5,066
Gross Unrealized Losses	260		88		98		290		—		736
Available-For-Sale Securities,   Pledged as Collateral											329,039
Maturities of Debt Securities, at Amortized Cost:
Within One Year	—		49,942		9,544		—				59,486
From 1 - 5 Years	121,477		72,919		133,726		16,115				344,237
From 5 - 10 Years	—		1,624		16,753		—				18,377
Over 10 Years	—		680		—		1,000				1,680
Maturities of Debt Securities, at Fair Value:
Within One Year	—		49,991		9,714		—				59,705
From 1 - 5 Years	121,220		73,099		137,302		16,039				347,660
From 5 - 10 Years	—		1,640		17,525		—				19,165
Over 10 Years	—		680		—		800				1,480
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	50,778	$	17,937	$	10,613	$	5,868	$	—	$	85,196
12 Months or Longer	6,124		3,653		4,063		3,392		—		17,232

Available-For-Sale Securities
	U.S. Agency Obligations		State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Mutual Funds and Equity Securities		Total Available- For-Sale Securities
Total	$	56,902	$	21,590	$	14,676	$	9,260	$	—	$	102,428
Number of Securities in a   Continuous Loss Position	16		87		9		13		—		125
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	222	$	72	$	81	$	50	$	—	$	425
12 Months or Longer	38		16		17		240		—		311
Total	$	260	$	88	$	98	$	290	$	—	$	736
December 31, 2013
Available-For-Sale Securities,   at Amortized Cost	$	136,868	$	127,224	$	171,321	$	17,142	$	1,120	$	453,675
Available-For-Sale Securities,   at Fair Value	136,475		127,389		175,778		16,798		1,166		457,606
Gross Unrealized Gains	2		306		4,714		10		46		5,078
Gross Unrealized Losses	395		141		257		354		—		1,147
Available-For-Sale Securities,   Pledged as Collateral											243,769
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	60,664	$	29,967	$	15,190	$	7,375	$	—	$	113,196
12 Months or Longer	33,849		4,597		11,841		6,063		—		56,350
Total	$	94,513	$	34,564	$	27,031	$	13,438	$	—	$	169,546
Number of Securities in a   Continuous Loss Position	26		107		13		19		—		165
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	336	$	120	$	108	$	92	$	—	$	656
12 Months or Longer	59		21		149		262		—		491
Total	$	395	$	141	$	257	$	354	$	—	$	1,147
March 31, 2013
Available-For-Sale Securities,   at Amortized Cost	$	132,217	$	104,304	$	219,067	$	12,913	$	1,120	$	469,621
Available-For-Sale Securities,   at Fair Value	132,153		104,469		228,323		12,691		1,139		478,775
Gross Unrealized Gains	23		228		9,256		2		19		9,528
Gross Unrealized Losses	87		63		—		224		—		374
Available-For-Sale Securities,   Pledged as Collateral											274,433
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	94,909	$	31,325	$	3	$	8,452	$	—	$	134,689
12 Months or Longer	—		1,481		—		—		—		1,481
Total	$	94,909	$	32,806	$	3	$	8,452	$	—	$	136,170
Number of Securities in a   Continuous Loss Position	28		154		1		11		—		194

Available-For-Sale Securities
	U.S. Agency Obligations		State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Mutual Funds and Equity Securities		Total Available- For-Sale Securities
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	87	$	61	$	—	$	224	$	—	$	372
12 Months or Longer	—		2		—		—		—		2
Total	$	87	$	63	$	—	$	224	$	—	$	374

The following table is the schedule of Held-To-Maturity Securities at March 31, 2014, December 31, 2013 and March 31, 2013:

Held-To-Maturity Securities
	State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Total Held-To Maturity Securities
March 31, 2014
Held-To-Maturity Securities,   at Amortized Cost	$	190,847	$	125,785	$	1,000	$	317,632
Held-To-Maturity Securities,   at Fair Value	195,524		125,811		1,000		322,335
Gross Unrealized Gains	5,042		274		—		5,316
Gross Unrealized Losses	365		248		—		613
Held-To-Maturity Securities,   Pledged as Collateral							316,632
Maturities of Debt Securities, at Amortized Cost:
Within One Year	31,895		—		—		31,895
From 1 - 5 Years	83,077		39,598		—		122,675
From 5 - 10 Years	72,886		86,187		—		159,073
Over 10 Years	2,989		—		1,000		3,989
Maturities of Debt Securities, at Fair Value:
Within One Year	31,941		—		—		31,941
From 1 - 5 Years	85,023		39,656		—		124,679
From 5 - 10 Years	75,467		86,155		—		161,622
Over 10 Years	3,093		—		1,000		4,093
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	19,696	$	43,049	$	—	$	62,745
12 Months or Longer	5,112		—		—		5,112
Total	$	24,808	$	43,049	$	—	$	67,857
Number of Securities in a   Continuous Loss Position	86		17		—		103
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	324	$	248	$	—	$	572
12 Months or Longer	41		—		—		41
Total	$	365	$	248	$	—	$	613

Held-To-Maturity Securities
	State and Municipal Obligations		Mortgage- Backed Securities - Residential		Corporate and Other Debt Securities		Total Held-To Maturity Securities
December 31, 2013
Held-To-Maturity Securities,   at Amortized Cost	$	198,206	$	100,055	$	1,000	$	299,261
Held-To-Maturity Securities,   at Fair Value	202,390		98,915		1,000		302,305
Gross Unrealized Gains	4,762		24		—		4,786
Gross Unrealized Losses	578		1,164		—		1,742
Held-To-Maturity Securities,   Pledged as Collateral							298,261
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	23,633	$	85,339	$	—	$	108,972
12 Months or Longer	5,111		—		—		5,111
Total	$	28,744	$	85,339	$	—	$	114,083
Number of Securities in a   Continuous Loss Position	101		36		—		137
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	519	$	1,164	$	—	$	1,683
12 Months or Longer	59		—		—		59
Total	$	578	$	1,164	$	—	$	1,742
March 31, 2013
Held-To-Maturity Securities,   at Amortized Cost	$	198,858	$	51,598	$	1,000	$	251,456
Held-To-Maturity Securities,   at Fair Value	206,141		52,421		1,000		259,562
Gross Unrealized Gains	7,317		823		—		8,140
Gross Unrealized Losses	34		—		—		34
Held-To-Maturity Securities,   Pledged as Collateral							250,456
Securities in a Continuous Loss Position, at Fair Value:
Less than 12 Months	$	8,794	$	—	$	—	$	8,794
12 Months or Longer	173		—		—		173
Total	$	8,967	$	—	$	—	$	8,967
Number of Securities in a   Continuous Loss Position	33		—		—		33
Unrealized Losses on Securities in a Continuous Loss Position:
Less than 12 Months	$	34	$	—	$	—	$	34
12 Months or Longer	—		—		—		—
Total	$	34	$	—	$	—	$	34

In the tables above, maturities of mortgage-backed-securities - residential are included based on their expected average lives.  Actual maturities will differ from the table below because issuers may have the right to call or prepay obligations with or without prepayment penalties.

In the available-for-sale category at March 31, 2014, U.S. agency obligations consisted solely of U.S. Government Agency securities with an amortized cost of $121.5 million and a fair value of $121.2 million. Mortgage-backed securities - residential consisted of U.S. Government Agency securities with an amortized cost of $30.6 million and a fair value of $31.3 million and government sponsored entity (GSE) securities with an amortized cost of $129.4 million and a fair value of $133.2 million. In the held-to-maturity category at March 31, 2014, mortgage-backed securities-residential consisted of U.S Government Agency securities with an amortized cost of $4.8 million and a fair value of $4.8 million and GSE securities with an amortized cost of $121.0 million and a fair value of $121.0 million.

In the available-for-sale category at December 31, 2013, U.S. agency obligations consisted solely of U.S. Government Agency securities with an amortized cost of $136.9 million and a fair value of $136.5 million. Mortgage-backed securities-residential consisted of U.S. Government Agency securities with an amortized cost of $31.5 million and a fair value of $32.2 million and GSE securities with an amortized cost of $139.8 million and a fair value of $143.6 million. In the held-to-maturity category at December 31, 2013, mortgage-backed securities-residential consisted of U.S. Government Agency securities with an amortized cost of $4.9 million and a fair value of $4.7 million and GSE securities with an amortized cost of $95.2 million and a fair value of $94.2 million.

In the available-for-sale category at March 31, 2013, U.S. agency obligations consisted solely of U.S. Government Agency securities with an amortized cost of $132.2 million and a fair value of $132.2 million. Mortgage-backed securities-residential consisted of US Government Agency securities with an amortized cost of $35.3 million and a fair value of $37.2 million and GSE securities with an amortized cost of $183.8 million and a fair value of $191.1 million. In the held-to-maturity category at March 31, 2013, mortgage-backed securities-residential consisted of GSE securities with an amortized cost of $51.6 million and a fair value of $52.4 million.

Securities in a continuous loss position, in the tables above for March 31, 2014, December 31, 2013 and March 31, 2013, do not reflect any deterioration of the credit worthiness of the issuing entities.  U.S. Agency issues, including agency-backed collateralized mortgage obligations and mortgage-backed securities, are all rated at least Aaa by Moody's or AA+ by Standard and Poor's.  The state and municipal obligations are general obligations supported by the general taxing authority of the issuer, and in some cases are insured. Obligations issued by school districts are supported by state aid.  For any non-rated municipal securities, credit analysis is performed in-house based upon data that has been submitted by the issuers to the NY State Comptroller. That analysis shows no deterioration in the credit worthiness of the municipalities.  Subsequent to March 31, 2014, and through the date of filing this report, there were no securities downgraded below investment grade.  

The unrealized losses on these temporarily impaired securities are primarily the result of changes in interest rates for fixed rate securities where the interest rate received is less than the current rate available for new offerings of similar securities, changes in market spreads as a result of shifts in supply and demand, and/or changes in the level of prepayments for mortgage related securities.   Because we do not currently intend to sell any of our temporarily impaired securities, and because it is not more likely-than-not that we would be required to sell the securities prior to recovery, the impairment is considered temporary.

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Investment Securities Available for Sale (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Available-For-Sale Securities, at Amortized Cost	$ 424,900	$ 453,675	$ 469,621
Available-for-Sale	429,230	457,606	478,775
Gross Unrealized Gains	5,066	5,078	9,528
Gross Unrealized Losses	736	1,147	374
Available-For-Sale Securities, Pledged as Collateral	329,039	243,769	274,433
Maturities of Debt Securities, at Amortized Cost
Within One Year	59,486
From 1 - 5 Years	344,237
From 5 - 10 Years	18,377
Over 10 Years	1,680
Maturities of Debt Securities at Fair Value
Within One Year	59,705
From 1 - 5 Years	347,660
From 5 - 10 Years	19,165
Over 10 Years	1,480
Securities in a Continuous Loss Position, at Fair Value
Less than 12 Months	85,196	113,196	134,689
12 Months or Longer	17,232	56,350	1,481
Total	102,428	169,546	136,170
Number of Securities in a Continuous Loss Position, in number of securities	125	165	194
Unrealized Losses on Securities in a Continuous Loss Position
Less than 12 Months	425	656	372
12 Months or Longer	311	491	2
Total	736	1,147	374
U.S. Agency Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Gross Unrealized Gains	3	2	23
Gross Unrealized Losses	260	395	87
Maturities of Debt Securities, at Amortized Cost
Within One Year	0
From 1 - 5 Years	121,477
From 5 - 10 Years	0
Over 10 Years	0
Maturities of Debt Securities at Fair Value
Within One Year	0
From 1 - 5 Years	121,220
From 5 - 10 Years	0
Over 10 Years	0
Securities in a Continuous Loss Position, at Fair Value
Less than 12 Months	50,778	60,664	94,909
12 Months or Longer	6,124	33,849	0
Total	56,902	94,513	94,909
Number of Securities in a Continuous Loss Position, in number of securities	16	26	28
Unrealized Losses on Securities in a Continuous Loss Position
Less than 12 Months	222	336	87
12 Months or Longer	38	59	0
Total	260	395	87
U.S. Agency Obligations [Member] | U.S. Government Agency Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-For-Sale Securities, at Amortized Cost	121,477	136,868	132,217
Available-for-Sale	121,220	136,475	132,153
State and Municipal Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-For-Sale Securities, at Amortized Cost	125,165	127,224	104,304
Available-for-Sale	125,410	127,389	104,469
Gross Unrealized Gains	333	306	228
Gross Unrealized Losses	88	141	63
Maturities of Debt Securities, at Amortized Cost
Within One Year	49,942
From 1 - 5 Years	72,919
From 5 - 10 Years	1,624
Over 10 Years	680
Maturities of Debt Securities at Fair Value
Within One Year	49,991
From 1 - 5 Years	73,099
From 5 - 10 Years	1,640
Over 10 Years	680
Securities in a Continuous Loss Position, at Fair Value
Less than 12 Months	17,937	29,967	31,325
12 Months or Longer	3,653	4,597	1,481
Total	21,590	34,564	32,806
Number of Securities in a Continuous Loss Position, in number of securities	87	107	154
Unrealized Losses on Securities in a Continuous Loss Position
Less than 12 Months	72	120	61
12 Months or Longer	16	21	2
Total	88	141	63
Mortgage-Backed Securities - Residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-For-Sale Securities, at Amortized Cost	160,023	171,321	219,067
Available-for-Sale	164,541	175,778	228,323
Gross Unrealized Gains	4,616	4,714	9,256
Gross Unrealized Losses	98	257	0
Maturities of Debt Securities, at Amortized Cost
Within One Year	9,544
From 1 - 5 Years	133,726
From 5 - 10 Years	16,753
Over 10 Years	0
Maturities of Debt Securities at Fair Value
Within One Year	9,714
From 1 - 5 Years	137,302
From 5 - 10 Years	17,525
Over 10 Years	0
Securities in a Continuous Loss Position, at Fair Value
Less than 12 Months	10,613	15,190	3
12 Months or Longer	4,063	11,841	0
Total	14,676	27,031	3
Number of Securities in a Continuous Loss Position, in number of securities	9	13	1
Unrealized Losses on Securities in a Continuous Loss Position
Less than 12 Months	81	108	0
12 Months or Longer	17	149	0
Total	98	257	0
Mortgage-Backed Securities - Residential [Member] | U.S. Government Agency Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-For-Sale Securities, at Amortized Cost	30,600	31,500	35,300
Available-for-Sale	31,300	32,200	37,200
Mortgage-Backed Securities - Residential [Member] | US Government-sponsored Enterprises Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-For-Sale Securities, at Amortized Cost	129,400	139,800	183,800
Available-for-Sale	133,200	143,600	191,100
Corporate and Other Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-For-Sale Securities, at Amortized Cost	17,115	17,142	12,913
Available-for-Sale	16,839	16,798	12,691
Gross Unrealized Gains	14	10	2
Gross Unrealized Losses	290	354	224
Maturities of Debt Securities, at Amortized Cost
Within One Year	0
From 1 - 5 Years	16,115
From 5 - 10 Years	0
Over 10 Years	1,000
Maturities of Debt Securities at Fair Value
Within One Year	0
From 1 - 5 Years	16,039
From 5 - 10 Years	0
Over 10 Years	800
Securities in a Continuous Loss Position, at Fair Value
Less than 12 Months	5,868	7,375	8,452
12 Months or Longer	3,392	6,063	0
Total	9,260	13,438	8,452
Number of Securities in a Continuous Loss Position, in number of securities	13	19	11
Unrealized Losses on Securities in a Continuous Loss Position
Less than 12 Months	50	92	224
12 Months or Longer	240	262	0
Total	290	354	224
Mutual Funds and Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-For-Sale Securities, at Amortized Cost	1,120	1,120	1,120
Available-for-Sale	1,220	1,166	1,139
Gross Unrealized Gains	100	46	19
Gross Unrealized Losses	0	0	0
Securities in a Continuous Loss Position, at Fair Value
Less than 12 Months	0	0	0
12 Months or Longer	0	0	0
Total	0	0	0
Number of Securities in a Continuous Loss Position, in number of securities	0	0	0
Unrealized Losses on Securities in a Continuous Loss Position
Less than 12 Months	0	0	0
12 Months or Longer	0	0	0
Total	$ 0	$ 0	$ 0

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Comprehensive Income Reclassification out of Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014		Mar. 31, 2013
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
INCOME BEFORE PROVISION FOR INCOME TAXES	$ 7,634		$ 7,420
Provision for Income Taxes	2,314		2,239
Net Income	5,320		5,181
Total Reclassifications out of Accumulated Other Comprehensive Income	(57)	[1]	82	[1]
Reclassification out of Accumulated Other Comprehensive Income [Member] | Unrealized Gains and Losses on Available for Sale Securities [Member]
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
Reclassification Adjustment for Securities Gains Included in Net Income, Before-Tax Amount	0	[1]	527	[1]
INCOME BEFORE PROVISION FOR INCOME TAXES	0	[1]	527	[1]
Provision for Income Taxes	0	[1]	(209)	[1]
Net Income	0	[1]	318	[1]
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment [Member]
Reclassification out of Accumulated Other Comprehensive Income [Line Items]
Amortization of Defined Benefit Pension Items, Prior-Service Costs, Before Tax	22	[1],[2]	0	[1],[2]
Amortization of Net Retirement Plan Actuarial Loss, Before-Tax Amount	(116)	[1],[2]	(391)	[1],[2]
INCOME BEFORE PROVISION FOR INCOME TAXES	(94)	[1]	(391)	[1]
Provision for Income Taxes	37	[1]	155	[1]
Net Income	$ (57)	[1]	$ (236)	[1]

[1] Amounts in parentheses indicate debits to profit/loss.

[2] These accumulated other comprehensive income components are included in the computation of net periodic pension cost (see pension footnote for additional details.).

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Loans (Tables)

3 Months Ended

Mar. 31, 2014

Loans and Leases Receivable Disclosure [Abstract]

Past Due Financing Receivables [Table Text Block]

The following table presents loan balances outstanding as of March 31, 2014, December 31, 2013 and March 31, 2013 and an analysis of the recorded investment in loans that are past due at these dates.  Generally, Arrow considers a loan past due 30 or more days if the borrower is two or more payments past due.   Loans held-for-sale of $502, $64 and $864 as of March 31, 2014, December 31, 2013 and March 31, 2013, respectively, are included in the residential real estate loan balances.

Past Due Loans
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Total
March 31, 2014
Loans Past Due 30-59 Days	$	597	$	—	$	1,381	$	73	$	2,641	$	2,026	$	6,718
Loans Past Due 60-89 Days	579		—		237		16		512		438		1,782
Loans Past Due 90 or more Days	29		—		1,785		—		150		2,244		4,208
Total Loans Past Due	1,205		—		3,403		89		3,303		4,708		12,708
Current Loans	88,671		28,026		305,438		7,694		397,318		470,568		1,297,715
Total Loans	$	89,876	$	28,026	$	308,841	$	7,783	$	400,621	$	475,276	$	1,310,423
Loans 90 or More Days Past Due   and Still Accruing Interest	$	—	$	—	$	—	$	—	$	—	$	347	$	347
Nonaccrual Loans	$	182	$	—	$	2,042	$	1	$	372	$	3,687	$	6,284
December 31, 2013
Loans Past Due 30-59 Days	$	304	$	—	$	200	$	37	$	3,233	$	529	$	4,303
Loans Past Due 60-89 Days	601		—		1,200		19		1,041		1,527		4,388
Loans Past Due 90 or more Days	177		—		2,034		—		98		3,113		5,422
Total Loans Past Due	1,082		—		3,434		56		4,372		5,169		14,113
Current Loans	86,811		27,815		284,685		7,593		389,832		455,623		1,252,359
Total Loans	$	87,893	$	27,815	$	288,119	$	7,649	$	394,204	$	460,792	$	1,266,472
Loans 90 or More Days Past Due   and Still Accruing Interest	$	28	$	—	$	—	$	—	$	—	$	624	$	652
Nonaccrual Loans	$	352	$	—	$	2,048	$	—	$	219	$	3,860	$	6,479
March 31, 2013
Loans Past Due 30-59 Days	$	428	$	—	$	1,351	$	26	$	1,986	$	1,481	$	5,272
Loans Past Due 60-89 Days	421		—		200		10		375		1,058		2,064
Loans Past Due 90 or more Days	130		—		1,886		—		98		1,302		3,416
Total Loans Past Due	979		—		3,437		36		2,459		3,841		10,752
Current Loans	88,188		27,380		251,805		6,995		351,542		428,097		1,154,007
Total Loans	$	89,167	$	27,380	$	255,242	$	7,031	$	354,001	$	431,938	$	1,164,759
Loans 90 or More Days Past Due   and Still Accruing Interest	$	—	$	—	$	—	$	—	$	—	$	259	$	259
Nonaccrual Loans	$	253	$	—	$	1,953	$	4	$	334	$	2,674	$	5,218

Allowance for Credit Losses on Financing Receivables [Table Text Block]

The following table presents a roll-forward of the allowance for loan losses and other information pertaining to the allowance for loan losses:

Allowance for Loan Losses
				Commercial		Commercial			Other
	Commercial			Construction		Real Estate			Consumer			Automobile			Residential			Unallocated			Total
Roll-forward of the Allowance for Loan Losses for the Year-to-Date Periods:
December 31, 2013	$	1,886		$	417	$	3,545		$	272		$	4,206		$	3,026		$	1,082		$	14,434
Charge-offs	(123		)	—		—			(14		)	(183		)	(16		)	—			(336		)
Recoveries	19			—		—			—			61			—			—			80
Provision	15			3		233			22			222			67			(104		)	458
March 31, 2014	$	1,797		$	420	$	3,778		$	280		$	4,306		$	3,077		$	978		$	14,636
December 31, 2012	$	2,344		$	601	$	3,050		$	304		$	4,536		$	3,405		$	1,058		$	15,298
Charge-offs	(773		)	—		(11		)	(8		)	(98		)	—			—			(890		)
Recoveries	4			—		—			—			91			—			—			95
Provision	44			11		340			12			(235		)	(13		)	(59		)	100
March 31, 2013	$	1,619		$	612	$	3,379		$	308		$	4,294		$	3,392		$	999		$	14,603

Allowance for Loan Losses
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Unallocated		Total
March 31, 2014
Allowance for loan losses - Loans Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance for loan losses - Loans Collectively Evaluated for Impairment	$	1,797	$	420	$	3,778	$	280	$	4,306	$	3,077	$	978	$	14,636
Ending Loan Balance - Individually Evaluated for Impairment	$	214	$	—	$	1,810	$	—	$	144	$	1,913	$	—	$	4,081
Ending Loan Balance - Collectively Evaluated for Impairment	$	89,662	$	28,026	$	307,031	$	7,783	$	400,477	$	473,363	$	—	$	1,306,342
December 31, 2013
Allowance for loan losses - Loans Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance for loan losses - Loans Collectively Evaluated for Impairment	$	1,886	$	417	$	3,545	$	272	$	4,206	$	3,026	$	1,082	$	14,434
Ending Loan Balance - Individually Evaluated for Impairment	$	221	$	—	$	1,785	$	—	$	173	$	2,309	$	—	$	4,488
Ending Loan Balance - Collectively Evaluated for Impairment	$	87,672	$	27,815	$	286,334	$	7,649	$	394,031	$	458,483	$	—	$	1,261,984
March 31, 2013
Allowance for loan losses - Loans Individually Evaluated for Impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance for loan losses - Loans Collectively Evaluated for Impairment	$	1,619	$	612	$	3,379	$	308	$	4,294	$	3,392	$	999	$	14,603
Ending Loan Balance - Individually Evaluated for Impairment	$	37	$	—	$	1,505	$	—	$	182	$	1,085	$	—	$	2,809
Ending Loan Balance - Collectively Evaluated for Impairment	$	89,130	$	27,380	$	253,737	$	7,031	$	353,819	$	430,853	$	—	$	1,161,950

Financing Receivable Credit Quality Indicators [Table Text Block]

The following table presents the credit quality indicators by loan category at March 31, 2014, December 31, 2013 and March 31, 2013:

Loan Credit Quality Indicators
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Total
March 31, 2014
Credit Risk Profile by Creditworthiness Category:
Satisfactory	$	82,263	$	28,026	$	287,532							$	397,821
Special Mention	960		—		614								1,574
Substandard	6,653		—		20,695								27,348
Doubtful	—		—		—								—
Credit Risk Profile Based on Payment Activity:
Performing							$	7,782	$	400,249	$	471,242	879,273
Nonperforming							1		372		4,034		4,407
December 31, 2013
Credit Risk Profile by Creditworthiness Category:
Satisfactory	79,966		27,815		267,612								375,393
Special Mention	204		—		634								838
Substandard	7,723		—		19,873								27,596
Doubtful	—		—		—								—
Credit Risk Profile Based on Payment Activity:
Performing							7,649		393,985		456,308		857,942
Nonperforming							—		219		4,484		4,703
March 31, 2013
Credit Risk Profile by Creditworthiness Category:
Satisfactory	82,063		26,180		234,609								342,852
Special Mention	183		—		1,385								1,568
Substandard	6,921		1,200		19,248								27,369
Doubtful	—		—		—								—
Credit Risk Profile Based on Payment Activity:
Performing							7,027		353,667		429,004		789,698
Nonperforming							4		334		2,934		3,272

Impaired Financing Receivables [Table Text Block]

The following table presents information on impaired loans based on whether the impaired loan has a recorded related allowance or has no recorded related allowance:

Impaired Loans
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Total
March 31, 2014
Recorded Investment:
With No Related Allowance	$	214	$	—	$	1,810	$	—	$	144	$	1,913	$	4,081
With a Related Allowance	—		—		—		—		—		—		—
Unpaid Principal Balance:
With No Related Allowance	214		—		1,810		—		144		1,913		4,081
With a Related Allowance	—		—		—		—		—		—		—
December 31, 2013
Recorded Investment:
With No Related Allowance	$	221	$	—	$	1,785	$	—	$	173	$	2,309	$	4,488
With a Related Allowance	—		—		—		—		—		—		—
Unpaid Principal Balance:
With No Related Allowance	221		—		1,785		—		173		2,309		4,488
With a Related Allowance	—		—		—		—		—		—		—
March 31, 2013
Recorded Investment:
With No Related Allowance	$	37	$	—	$	1,505	$	—	$	182	$	1,085	$	2,809
With a Related Allowance	—		—		—		—		—		—		—
Unpaid Principal Balance:
With No Related Allowance	37		—		1,505		—		182		1,085		$	2,809
With a Related Allowance	—		—		—		—		—		—		—
For the Year-To-Date Period Ended:
March 31, 2014
Average Recorded Balance:
With No Related Allowance	$	218	$	—	$	1,798	$	—	$	159	$	2,111	$	4,286
With a Related Allowance	—		—		—		—		—		—		—
Interest Income Recognized:
With No Related Allowance	3		—		10		—		2		1		16
With a Related Allowance	—		—		—		—		—		—		—
Cash Basis Income:
With No Related Allowance	—		—		—		—		—		—		—
With a Related Allowance	—		—		—		—		—		—		—
March 31, 2013
Average Recorded Balance:
With No Related Allowance	$	41	$	—	$	2,017	$	—	$	193	$	1,088	$	3,339
With a Related Allowance	694		—		—		—		—		—		694
Interest Income Recognized:
With No Related Allowance	1		—		—		—		2		4		7
With a Related Allowance	72		—		—		—		—		—		72
Cash Basis Income:
With No Related Allowance	—		—		—		—		—		—		—
With a Related Allowance	72		—		—		—		—		—		72

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

The following table presents information on loans modified in trouble debt restructurings during the periods indicated:

Loans Modified in Trouble Debt Restructurings During the Period
			Commercial		Commercial		Other
	Commercial		Construction		Real Estate		Consumer		Automobile		Residential		Total
For the Year-To-Date Period Ended:
March 31, 2014
Number of Loans	—		—		—		—		1		—		1
Pre-Modification Outstanding Recorded Investment	$	—	$	—	$	—	$	—	$	2	$	—	$	2
Post-Modification Outstanding Recorded Investment	$	—	$	—	$	—	$	—	$	2	$	—	$	2
March 31, 2013
Number of Loans	—		—		—		—		2		—		2
Pre-Modification Outstanding Recorded Investment	$	—	$	—	$	—	$	—	$	11	$	—	$	11
Post-Modification Outstanding Recorded Investment	$	—	$	—	$	—	$	—	$	11	$	—	$	11